LB Group(SZ:002601) Huafu Securities·2024-10-08 13:11Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [2][4]. Core Viewpoints - Longbai Group is a global leader in titanium dioxide (TiO2) production, with a total capacity of 850,000 tons/year for sulfate process and 660,000 tons/year for chloride process, benefiting from strong resource and technological advantages [1][10]. - The domestic supply of titanium dioxide is expected to tighten, while overseas capacity is being reduced, leading to a favorable industry outlook [1][67]. - The company is expanding its sponge titanium production capacity, which is currently 80,000 tons/year, and is focusing on high-end applications in aerospace and defense [1][10]. - The company is strategically positioned in the new energy materials sector, with existing capacities of 100,000 tons for iron phosphate, 50,000 tons for lithium iron phosphate, and 25,000 tons for graphite anodes, although it plans to pause new investments in this area due to industry overcapacity [2][10]. Summary by Sections 1. Business Overview - Longbai Group is a diversified enterprise focusing on new material research and manufacturing, with a history of significant mergers and acquisitions that have bolstered its market position [10][19]. - The company has a young and professional management team, enhancing its innovative capabilities [19]. 2. Resource Supply Advantage - The company has secured mining rights for several iron mines, ensuring a resource reserve of over 300 million tons, which can sustain operations for approximately 20 years [1][45]. - The global supply of titanium ore is limited, with China being a major contributor to new resource increments [37][39]. 3. Titanium Dioxide Leadership - Longbai Group holds the largest production capacity for sulfate titanium dioxide globally and ranks first in China for chloride titanium dioxide production [1][62]. - The company is expected to benefit from a recovery in the titanium dioxide market as the real estate sector stabilizes [53][67]. 4. Sponge Titanium Production - The company is a pioneer in high-end sponge titanium production, with plans for further expansion and potential listing of its subsidiary to enhance market competitiveness [1][10]. 5. New Energy Materials - Longbai Group has established a foothold in the new energy materials market but will delay further capacity investments due to current industry overcapacity [2][10]. 6. Financial Forecast and Investment Advice - Revenue projections for 2024-2026 are estimated at 301.9 billion, 332.6 billion, and 367.0 billion yuan, with net profits of 34.6 billion, 40.8 billion, and 49.2 billion yuan respectively [2][3].