3Q26 results in line with our expectations

Orient Tantalum Industry announced its 3Q26 results: In 1– 3Q26, revenue rose 60% YoY to Rmb1.92bn. Attributable net profit grew 20% YoY to Rmb251mn. In 3Q26, revenue rose 119% YoY and 57% QoQ to Rmb881mn. Attributable net profit rose 102% YoY and 89% QoQ to Rmb128mn.

Sales volume and profit of major products rose; 1–3Q26 attributable net profit hit a record high. 1) Production and sales volume: According to the firm's announcement, in 1– 3Q26, production capacity of the firm’s fundraising-backed projects continued to ramp up, and product sales volume increased YoY. 2) Prices: According to asianmetal.cn, the domestic ASP of tantalum ore, tantalum oxide, and tantalum metal rose 133%, 131%, and 135% YoY in 1–3Q26, as rising raw material prices pushed up the selling prices of tantalum products. In 1–3Q26, gross margin rose 1.3ppt YoY to 19.4%.

Tantalum prices remained high in 3Q26; rising output and pass-through of order prices supported rapid YoY and QoQ profit growth. According to asianmetal.cn, the domestic ASP of tantalum ore, tantalum oxide, and tantalum metal increased 3%, fell 3%, and fell 1% QoQ in 3Q26. In 3Q26, gross profit rose 154% YoY and 42% QoQ to Rmb177mn, and quarterly recurring net profit attributable to shareholders hit a record high.

Cash flow under short-term pressure due to proactive inventory buildup; investment income temporarily drags earnings. In 1–3Q26, net operating cash flow stood at -Rmb1,189mn, mainly due to higher raw material prices, rising orders on hand, increased inventory of products and raw material purchases. As of end-3Q26, inventory was Rmb1,948mn, up 110% from the beginning of the reporting period. Investment income turned negative in 3Q26 (down Rmb19mn YoY and Rmb2mn QoQ) and fell 78% YoY in 1– 3Q26.

Trends to watch

Upstream resource security continues to strengthen; clear path for capacity expansion in midstream and downstream segments; presence along the full industry chain to support high-quality growth. Resource security: The company’s controlling shareholder has acquired the Taboca tantalumniobium- tin polymetallic mine, which is likely to enhance the company’s raw material security and cost control capabilities. Smelting capacity: According to the company’s announcements, the three projects funded by private placement proceeds — hydrometallurgy, pyrometallurgy smelting, and high-end product manufacturing — have entered the equipment installation and commissioning phase. The company expects these projects to be ready for their intended use from June to October 2027. We estimate that after these projects come on stream, the company’s total full-industry-chain capacity will expand to approximately 2.78 times its 2025 level.

Financials and valuation

We keep our earnings forecasts largely unchanged. The stock is trading at 57.1x 2026e and 36.7x 2027e P/E. We maintain an OUTPERFORM rating and target price of Rmb56.07, implying 50x 2027e P/E and offering 36.4% upside.

Risks

Sharper-than-expected decline in tantalum prices; slower-thanexpected production capacity expansion; use of working capital.