Investment Highlights: The company released its 2025 semi-annual report, showing operating revenue of 13.331 billion yuan in the first half, down 3.34% year-on-year. Net profit attributable to listed company shareholders reached 1.385 billion yuan, declining 19.53% year-on-year, while adjusted net profit was 1.347 billion yuan, down 19.61% year-on-year. Basic earnings per share came in at 0.58 yuan.
Titanium dioxide market downturn continues to pressure profitability, while new energy business shows improved earnings. Since 2024, the titanium dioxide industry has faced continued downward pressure due to capacity expansion, slowing demand, and overseas anti-dumping measures. The industry's downward trend persisted in the first half of the year, putting pressure on the company's performance.
From a product perspective, the company's titanium dioxide production reached 682,200 tons in H1 2025, up 5.02% year-on-year, with sales volume of 612,000 tons, increasing 2.08% year-on-year. Affected by declining titanium dioxide prices, titanium dioxide business revenue was 8.684 billion yuan, down 7.68% year-on-year.
For sponge titanium, H1 production was 36,200 tons, up 9.30% year-on-year, with sales volume of 38,700 tons, surging 25.51% year-on-year, generating revenue of 1.49 billion yuan, up 12.96% year-on-year.
In other business segments, iron-based products and zirconium-based products achieved revenues of 1.169 billion yuan and 515 million yuan respectively in the first half, up 10.61% and 18.95% year-on-year. New energy materials revenue reached 527 million yuan, up 27.23% year-on-year. Due to the decline in titanium dioxide business, the company's total operating revenue was 13.331 billion yuan in the first half, down 3.34% year-on-year.
In terms of profitability, the company's comprehensive gross margin was 23.62% in the first half, down 3.91 percentage points year-on-year, with net sales margin at 10.48%, declining 1.94 percentage points. Specifically, titanium dioxide business gross margin was 27.11%, down 6.40 percentage points year-on-year; iron-based products gross margin was 53.89%, up 11.79 percentage points year-on-year; zirconium-based products gross margin was 17.62%, up 2.62 percentage points year-on-year; sponge titanium gross margin was -0.05%, down 10.54 percentage points year-on-year; new energy materials gross margin was 12.39%, up 14.97 percentage points year-on-year. Overall, titanium dioxide and sponge titanium businesses were affected by industry downturn, with declining profitability pressuring company earnings, while iron products and new energy materials businesses showed significant profitability improvements. Affected by declining profitability, the company achieved net profit of 1.385 billion yuan in the first half, down 19.53% year-on-year.
Industry operating at cyclical bottom, company demonstrates strong earnings resilience through vertical integration.
Since 2024, affected by anti-dumping measures in multiple overseas markets, titanium dioxide market sentiment has continued declining, with current prices at the bottom since 2020, and industry profitability at low levels. The company has maintained relatively good profitability at the industry cyclical bottom, demonstrating earnings resilience through upstream titanium concentrate resource security, integrated industrial chain advantages, and unique production models. In recent years, the company has continued extending upstream, deepening industrial chain integration, and continuously enhancing cost competitiveness. Going forward, the company will continue strengthening upstream raw material security, actively advancing two core projects: "Joint Development of Two Mines in Hongge North Mining Area" and "Xujiagou Iron Mine Development." Upon completion, the company's titanium concentrate capacity will reach 2.48 million tons/year and iron concentrate capacity will reach 7.6 million tons/year, further enhancing the company's resource security.
Accelerating global expansion to develop overseas markets. Since August 2023, the Eurasian Economic Union, European Union, India, Brazil, and Saudi Arabia have successively initiated anti-dumping investigations against China's titanium dioxide industry, significantly impacting the industry and compressing export space for Chinese titanium dioxide companies. The company is actively adjusting business strategies to respond to market changes and advancing overseas product and capacity deployment. Currently, the company has basically completed preliminary due diligence work including overseas site selection. Through the overseas strategy, the company can integrate global resources and achieve complementary advantages. Under the promotion of global expansion, the company's competitiveness is expected to remain strong.
Earnings Forecast and Investment Rating: We forecast the company's EPS for 2025 and 2026 to be 1.20 yuan and 1.47 yuan respectively. Based on the closing price of 17.89 yuan on August 20, the corresponding PE ratios are 14.90x and 12.15x respectively. Considering industry prospects and the company's industry position, we maintain a "Buy" investment rating for the company.
Risk Warning: Changes in overseas trade policies, rising raw material prices, intensifying industry competition