LB Group(002601) 东方证券·2024-11-19 09:06Investment Rating - The report initiates coverage on Longbai Group with an Overweight rating and a target price of 20.28 CNY for 2025, based on a 12x P/E multiple [2][4] Core Views - Longbai Group is the world's largest titanium dioxide (TiO2) producer with an annual capacity of 1.51 million tons, holding a 17% global market share in 2023 [1] - The company has demonstrated strong endogenous and exogenous growth through acquisitions and technological advancements, particularly in chloride process TiO2 and sulfur-chlorine coupling technology, which have given it a cost advantage [1][22] - Despite anti-dumping measures in overseas markets, China's TiO2 export growth trend remains intact, with export CAGR of 15% over the past eight years, accounting for nearly 40% of total production [1][56] - Leading companies like Longbai are expected to seize overseas opportunities, with potential for higher returns and stable profits from overseas investments, similar to the tire industry's experience [1][110] Financial Projections - Revenue is projected to grow from 26.765 billion CNY in 2023 to 34.34 billion CNY in 2026, with a CAGR of 10.5% [3] - Net profit attributable to shareholders is expected to increase from 3.226 billion CNY in 2023 to 4.633 billion CNY in 2026, with a CAGR of 15% [3] - EPS is forecasted to rise from 1.35 CNY in 2023 to 1.94 CNY in 2026 [3] Industry Analysis - Anti-dumping measures in key markets like the EU, India, and Brazil have reshaped global trade flows but have not significantly impacted China's TiO2 export growth [56][61] - The EU's anti-dumping tariffs range from 11.4% to 32.3%, but China's TiO2 exports to the EU have shown resilience, with exports rebounding in August 2024 after a temporary dip in July [61][74] - Global TiO2 demand is expected to grow in line with global GDP, with Asia-Pacific and Africa being key growth regions due to infrastructure and real estate development [55][93] Company's Competitive Advantages - Longbai has vertically integrated its supply chain, with 40% self-sufficiency in titanium concentrate and plans to increase this to 70% by the end of the 14th Five-Year Plan [22][35] - The company has pioneered sulfur-chlorine coupling technology, reducing costs for chloride process TiO2 production by 1,169 CNY per ton [40][41] - Longbai's chloride process TiO2 capacity is 660,000 tons/year, making it the third-largest globally and the largest in China, with a 63% share of domestic chloride process production in 2023 [32][35] Overseas Expansion Opportunities - Anti-dumping measures are seen as a catalyst for overseas expansion, with Longbai well-positioned to establish overseas plants and capture higher-margin markets [110][111] - The EU's rising TiO2 prices (from 3,040 USD/ton in July 2024 to 3,210 USD/ton in September 2024) create opportunities for global trade flow adjustments and higher returns for exporters [95][96] - Southeast Asia and Turkey are emerging as key markets for TiO2 exports, with Vietnam and India showing significant growth in demand [103][104]