Sichuan Anning Iron and Titanium (SZ:002978) HTSC·2025-10-27 07:00Investment Rating - The report maintains an "Overweight" rating for the company [6][4]. Core Views - The company reported a revenue of 1.61 billion RMB for the first three quarters of 2025, an increase of 18% year-on-year, but the net profit attributable to shareholders decreased by 7.3% year-on-year to 633 million RMB [1][6]. - The third quarter saw a net profit of 192 million RMB, down 21% year-on-year and 8.8% quarter-on-quarter, which aligns with expectations [1][4]. - The company possesses scarce titanium ore resources, which are expected to support its profit margins in the long term [1][4]. Summary by Sections Financial Performance - In Q3 2025, the company achieved a net profit of 192 million RMB, with a non-recurring net profit of 199 million RMB, reflecting a year-on-year decline of 21% and 19% respectively [1][2]. - The overall gross margin for the first three quarters decreased by 4.4 percentage points to 62.6%, while the expense ratio increased by 2.3 percentage points to 9.5% [2][4]. Market Conditions - The average price of domestic titanium concentrate in Q3 2025 fell by 20% year-on-year and 6.7% quarter-on-quarter to 1,707 RMB per ton, influenced by weak downstream demand for titanium dioxide [2][3]. - The company completed the acquisition of 100% equity in Panzhihua Jingzhi Mineral, enhancing its competitive position in the titanium ore sector [3][4]. Profit Forecast and Valuation - The profit forecast for 2025-2027 has been revised downwards, with expected net profits of 830 million, 1 billion, and 1.07 billion RMB respectively, reflecting a decrease of 9.1%, 5.8%, and 5.7% from previous estimates [4][10]. - The target price is set at 38.16 RMB, based on an 18x PE for 2026, considering the company's leading position in the titanium ore market [4][11].