Key takeaway

1. In 1H26, the company recorded net profit attributable to shareholders of the parent company of RMB122mn, down 15.5 % YoY; in 2Q26, net profit attributable to shareholders of the parent company was RMB68 mn, down 23.2 % YoY and up 2 5.0 % QoQ. It plans to distribute a cash dividend of RMB0.73 (tax included) for every 10 shares to all shareholders.

2. Tantalum product sales volume and prices both increased, driving substantial revenue growth in 1H26. However, lower investment income from associates, increased foreign exchange losses and the lag in passing through product price increases, among other factors, put net profit attributable to shareholders of the parent company under short-term pressure.

3. Construction of the fundraising projects is progressing smoothly, which will effectively remove the company’s capacity constraints.

4. Benefiting from the growth of booming industries such as AI tantalum capacitors, advanced-process chips, aerospace engines and gas turbine s, the company’s product prices and gross margin are expected to rise in tandem.

Event

The company released its 1H26 report In 1H26, the company generated revenue of RMB1.040bn, up 30.5% YoY, and net profit attributable to shareholders of the parent company of RMB122mn, down 15.5 % YoY. In 2Q26, net profit attributable to shareholders of the parent company was approximately RMB6 8 mn, down 23.2 % YoY and up 25.0 % QoQ. It plans to distribute a cash dividend of RMB0.73 (tax included) for every 10 shares to all shareholders.

Quick Take

1. Higher sales volume and prices drove substantial revenue growth in 1H26 In 1H26, the average Baichuan tantalum ingot price was RMB5,548/kg, up 112% from the 2025 average of RMB2,612/kg. Amid sharp increases in tantalum and niobium raw material prices, the company continued to pass through higher costs, with product pricing effectively linked to raw material prices. In addition, capacity from the company’s fundraising projects was gradually ramped up, while sufficient orders on hand drove YoY growth in product sales volume. Driven by higher tantalum product sales volume and prices, the company’s revenue grew 30.5% YoY in 1H26.

Due to a 66% YoY decline in investment income from the associate Northwest Institute for Nonferrous Metal Research, caused by industry policies, upstream raw material supply and cyclical fluctuations in demand from key downstream customers, together with increased foreign exchange losses resulting from the appreciation of the RMB against the USD and the translation of foreign-currency assets, rising upstream raw material prices and a time lag in passing through product price increases, the company’s net prof it attributable to shareholders of the parent company fell 15.5% YoY. However, its core tantalum and niobium business generated total profit of RMB110mn, up 5.2% YoY.

2. Fundraising investment projects are progressing smoothly, effectively resolving the company's capacity bottlenecks

In 2026, the company launched a new round of fundraising investment projects totaling RMB1.189bn. Civil works for the digital tantalum-niobium hydrometallurgical plant have been completed, and the overall project has entered the equipment installation and commissioning stage; the capacity expansion and renovation project for the tantalum-niobium pyrometallurgical smelting product production line is progressing in an orderly manner, with milestone achievements in both construction and equipment installation and commissioning, and major equipment successively entering commissioning and trial production; equipment procurement and construction for the high-end tantalum-niobium product production line are also advancing concurrently in an orderly manner, with major equipment currently being installed and commissioned. Once operational, these three projects will effectively resolve capacity bottlenecks, ensure secure and independently controlled supplies of key raw materials, and further strengthen the company's competitive barriers.

3. Benefiting from the growth of high-demand industries such as AI tantalum capacitors, advanced-process chips, aerospace engines, and gas turbines, the company's product selling prices and gross margin are expected to rise in tandem

Driven by the rapid growth of the global AI and aerospace industries and accelerated military equipment deployment across countries amid an “era of disorder,” demand for tantalum, a metal with exposure to AI, aerospace, and defense, is entering a period of rapid growth across three major applications: capacitors, semiconductor targets, and superalloys. Niobium is benefiting from the rapid development of superconducting technology and growing demand for superalloys.

The company is China's largest production base for tantalum and niobium products and a technology-led tantalum-niobium research center. It is responsible for ensuring secure and independently controlled supplies of high-performance rare metal materials for China's emerging productive forces, represented by AI, semiconductors, superconducting materials, and space technology, giving it significant strategic importance. Meanwhile, amid robust downstream demand for tantalum capacitors and other products, the company's product selling prices and gross margin are expected to rise in tandem.

Investment recommendation: The company's net profit attributable to shareholders of the parent company from 2026 to 2028 is estimated to be RMB360mn, RMB530mn, and RMB700mn, respectively. The PE multiples corresponding to the current stock price are 77.52x, 52.93x, and 40.28x, respectively. Considering the company's industry position and growth potential, we assign the company a “Buy” rating.

Risks:

(1) Raw material prices increase. The raw materials for the company's main products are imported from overseas. Significant volatility in ore prices and changes in the international political and economic environment create uncertainty over the company's ability to secure sufficient raw materials. According to the company's 2025 annual report, raw materials accounted for 74.56% of costs. A sharp increase in raw material prices would cause a temporary decline in gross margin. Based on estimates, a 5% increase in raw material prices could result in a temporary decline of approximately 15% in net profit attributable to shareholders of the parent company.

(2) Foreign exchange rate fluctuation risk. The company's import and export transactions are primarily settled in major currencies such as the US dollar, euro, and Japanese yen. The company primarily faces the following two types of foreign exchange rate risk in its foreign-related business: transaction risk, which refers to the possibility of losses caused by foreign exchange rate fluctuations in transactions denominated and settled in foreign currencies; and translation risk, which refers to the possibility of book losses caused by exchange rate fluctuations when foreign currencies are translated into RMB for balance sheet accounting purposes.

(3) Downstream consumption not meeting expectations.