LB Group(SZ:002601) Tianfeng Securities·2025-10-20 05:45Investment Rating - Industry rating is Neutral (maintained rating) [5] Core Viewpoints - Longbai Group plans to acquire Venator UK, which will enhance the global competitiveness of Chinese titanium dioxide companies [1][3] - Venator is one of the four major titanium dioxide producers in Europe and North America, with a continuous capacity reduction since 2016 and a 28% year-on-year revenue decline in 2023 [2][11] - If the acquisition is successful, Longbai Group's total capacity will increase to 1.66 million tons, with chloride process capacity rising to 810,000 tons [3][18] Summary by Sections Acquisition Details - Longbai Group's subsidiary, Baililian Europe, signed an asset purchase agreement with Venator UK on October 15, 2025, to acquire assets related to the titanium dioxide business for $69.9 million [1][9][10] - The assets include land, buildings, machinery, spare parts, business books, intellectual property, and inventory [1][9] Venator's Business Performance - Venator's revenue in 2023 was $1.556 billion, down 28% year-on-year, with an adjusted EBITDA of -$240 million [2][13] - The titanium dioxide segment generated $1.18 billion in revenue, accounting for 76% of total revenue, primarily due to weak demand leading to an 18% decline in sales volume and an 8% drop in prices [2][13] Market Dynamics - The acquisition is expected to help Longbai Group mitigate high anti-dumping duties and enhance its market presence in Europe and North America, where Venator's products are well-regarded [3][19][20] - The global titanium dioxide market is facing challenges due to rising energy costs and capacity expansions in China, impacting overseas competitors [3][17] Competitive Advantages - Chloride process production has advantages over sulfate process, including shorter production cycles and better product quality, which will be beneficial for Longbai Group post-acquisition [18] - Venator's high-performance titanium dioxide products will enhance Longbai Group's international competitiveness if integrated into its product line [22]