LB Group(SZ:002601) Guoxin Securities·2025-10-28 01:02Investment Rating - The investment rating for Longbai Group is "Outperform the Market" [6][4][19] Core Views - The company experienced a decline in net profit in Q3 2025, with revenue of 6.1 billion yuan (down 13.7% year-on-year, down 2.7% quarter-on-quarter) and a net profit of 290 million yuan (down 65.7% year-on-year, down 58.6% quarter-on-quarter) [1][10] - The decline in revenue and net profit is primarily attributed to the drop in titanium dioxide prices and weak demand in the domestic market [1][10] - The report anticipates that the industry concentration will further increase due to the ongoing supply-demand imbalance in the titanium dioxide market [2][14] Financial Performance Summary - For Q3 2025, the gross margin was 19.4% (down 6.4 percentage points year-on-year, down 5.1 percentage points quarter-on-quarter), and the net profit margin was 4.7% (down 7.2 percentage points year-on-year, down 6.5 percentage points quarter-on-quarter) [1][10] - The company’s operating expenses ratio was 12.1% (up 0.8 percentage points year-on-year, up 1.2 percentage points quarter-on-quarter) [1][10] - The forecast for net profit for 2025-2027 has been revised down to 2.179 billion, 2.601 billion, and 2.920 billion yuan respectively, with corresponding EPS of 0.91, 1.09, and 1.22 yuan [4][19] Market Conditions - The average price of rutile titanium dioxide in Q3 2025 was approximately 12,997 yuan/ton (down 14% year-on-year, down 9% quarter-on-quarter) [2][14] - The total production of titanium dioxide in China for the first three quarters of 2025 was 3.4 million tons, an increase of about 570,000 tons (20% year-on-year) [2][14] - The report notes that the domestic real estate market is under pressure, with a cumulative year-on-year decline of 15% in housing completion area as of September 2025 [2][14] Future Outlook - The company is actively advancing projects such as the joint development of the Hongge North Mine and the Xujia Mine, which are expected to increase titanium concentrate capacity to 2.48 million tons and iron concentrate capacity to 7.6 million tons [3][17] - Despite the current challenges, the company maintains a strong position in the titanium dioxide industry, and the report suggests that the stock remains a favorable investment option [4][19]