Lb Group Co.Ltd(002601) (002601)
Event: Lb Group Co.Ltd(002601) released the performance forecast for 2021. The company expects the net profit attributable to the parent company in 2021 to be 4.577 billion yuan to 5.722 billion yuan, an increase of 100% – 150% over the same period of the previous year. Corresponding to the fourth quarter net profit of 747 million yuan to 1.891 billion yuan, a month on month decrease of 46.52% to an increase of 35.46%.
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The titanium dioxide market is in a business cycle, with both volume and price rising, and the performance has increased significantly year-on-year. Since the third quarter, the production of titanium dioxide enterprises has been disturbed by environmental protection, power restriction and other factors, the operating rate has decreased, and the market supply is tight. In November, the impact of power rationing weakened, the operating rate of titanium dioxide enterprises increased, and the supply pressure eased. However, the demand side entered the traditional off-season and weakened slightly. Throughout the year, titanium dioxide is still in the business cycle. As of December 5, the average price of rutile titanium dioxide in the year was 19132 yuan / ton, an increase of 5168 yuan / ton over last year; The price difference between titanium dioxide and titanium concentrate was 14052 yuan / ton, with a year-on-year increase of 3799 yuan / ton. Although the sharp rise in the price of raw and auxiliary materials and transportation costs has a certain adverse impact on the operating performance, the competitive advantage of the company’s vertically integrated whole industry chain has fully emerged. At the same time, the utilization rate of existing titanium dioxide production capacity is improved, especially the effective release of chlorination production capacity, so as to ensure the upward performance of the company.
The export of titanium dioxide continues to improve, and the company’s share may continue to increase. According to the customs data, the export volume of titanium dioxide in October 2021 was about 115800 tons, an increase of about 8000 tons compared with September. In addition to the reduction of sea freight prices, it is expected that the titanium dioxide export market is expected to continue to improve in November. In many months of the year, the export volume remained above 100000 tons, and the vigorous export of titanium dioxide has become the norm. In November, the international titanium dioxide giant enterprises collectively raised the price of titanium dioxide, and the price of Kemu, tenor, fannengtuo and Connors increased by US $300-400 / ton. The international titanium dioxide market price increases, while the Chinese market is in the off-season, and the later good is expected to be transmitted. According to the announcement, the company signed a strategic cooperation agreement with Australia East zirconium Resources Co., Ltd. to further ensure the stable supply of raw materials; Longbai Xiangyang has added a 200000 t / a titanium dioxide post-treatment production line, and the competitiveness and market share of the company’s titanium dioxide products may be further improved.
Overweight new energy battery materials, and the second growth curve is clear. According to the interactive platform, the first phase of the company’s 200000 tons of iron phosphate, 200000 tons of lithium iron phosphate and 100000 tons of graphite anode project is expected to be completed and put into operation by the end of the year, and the external delivery of pilot samples has been recognized by customers. In addition, the company also plans an annual output of 200000 tons of lithium-ion battery cathode material integration project and an annual output of 150000 tons of battery grade lithium iron phosphate project in Nanzhang county. The new energy material project invested and constructed by the company will form a new performance growth point, form a synergistic effect with the existing titanium industry chain, and ensure the development of the enterprise in the 14th five year plan.
Risk tip: the price of titanium dioxide fluctuates greatly, and the production progress of the project does not meet expectations.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 4.989 billion, RMB 5.425 billion and RMB 5.814 billion respectively, and the EPS will be RMB 2.09, RMB 2.28 and RMB 2.44 respectively, maintaining the buy rating.
