Investment Rating - The investment rating for the company is "Outperform the Market" [4][6][29] Core Views - The company's Q2 2025 net profit attributable to shareholders increased sequentially, demonstrating resilience as revenue was 6.28 billion yuan (YoY -3.5%, QoQ -11.0%) and net profit was 700 million yuan (YoY -9.2%, QoQ +1.9%) [1][8] - The decline in net profit year-on-year is primarily due to falling titanium dioxide prices, while the sequential increase is attributed to optimization in sponge titanium and new energy materials businesses [1][8] - The company maintains a leading position in the titanium dioxide industry, but profitability is under pressure due to weak supply and demand dynamics in titanium dioxide and titanium ore [4][29] Summary by Sections Financial Performance - In Q2 2025, the gross margin was 24.5% and net margin was 11.2%, showing a year-on-year decline but a sequential improvement [1][8] - The company reported a total revenue of 8.66 billion yuan for the first half of 2025, with titanium dioxide revenue accounting for 65.0% of total revenue [1][17] - The company’s net profit forecast for 2025-2027 has been adjusted to 2.998 billion, 3.505 billion, and 3.810 billion yuan respectively [4][29] Product Performance - Titanium dioxide production and sales increased in the first half of 2025, with production at 682,200 tons (YoY +5%) and sales at 612,000 tons (YoY +2%) [1][17] - Sponge titanium revenue grew to 1.49 billion yuan (YoY +13%), with production at 36,200 tons (YoY +9%) and sales at 38,700 tons (YoY +26%) [3][25] - New energy materials revenue reached 530 million yuan (YoY +27%), with a gross margin of 12.4% [3][25] Market Conditions - The titanium ore and iron ore prices have seen a decline, with titanium ore price averaging 1,831 yuan/ton in Q2 2025 (YoY -17%, QoQ -11%) [2][18] - The market for sponge titanium remains tight, supported by increased military demand, with the average market price for sponge titanium at 50,962 yuan/ton in Q2 2025 (YoY -3%, QoQ +9%) [3][25] - The company is actively developing new mining projects to enhance its titanium ore and iron ore production capacity [2][18]