Investment summary:
Talk every Monday:
Recently, Lb Group Co.Ltd(002601) , Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) and other listed companies announced that since the beginning of January 2022, the sales price of various models of titanium dioxide will be increased by as much as 1000 yuan / ton. We believe that the increase in the price of titanium dioxide will play a thickening role in the company's performance. Considering that the supply and demand of titanium dioxide are still good, the industry boom pattern next year is expected to continue.
The supply pattern is still good, and the rising cost is one of the driving forces for the continuous price increase of titanium dioxide. The mining progress of global high-grade titanium concentrate (TiO2 ≥ 92%) is slow and shows a downward trend. Driven by demand, the average annual increase of 46% titanium concentrate has reached 60% year-on-year. The sharp rise in the price of upstream raw materials provides strong cost support for titanium dioxide. Under the background of the dual control policy of energy consumption and stricter environmental protection, the new capacity is relatively small. In 2021, the effective capacity of the titanium dioxide industry will be released only 100000-150000. At the same time, with the gradual withdrawal of small and medium-sized enterprises, the titanium dioxide industry will usher in an accelerated reshuffle, and the scale advantage of the industry leader will become more prominent.
Export drives demand: titanium dioxide is widely used in coatings, inks, papermaking, plastics and other industries. The coating industry is the largest downstream demand for titanium dioxide, accounting for 55%. Export is the key factor supporting the demand for titanium dioxide. From the customs sales data, the export of titanium dioxide has shown a year-on-year upward trend for seven consecutive months, and the cumulative export volume from January to October has reached 1054500 tons. The export share of China's major production enterprises basically accounts for 30% - 40% of the total sales, which plays a positive role in stimulating demand.
Investment strategy: driven by the prosperity cycle of titanium dioxide, the rising price of titanium dioxide will thicken the company's performance. The performance forecasts for 2021 issued by Lb Group Co.Ltd(002601) , Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) and Anhui Annada Titanium Industry Co.Ltd(002136) are all outstanding. Among them, Lb Group Co.Ltd(002601) is expected to achieve a net profit of 4.577 billion-5.722 billion yuan in 2021, with a year-on-year increase of 100% - 150%; Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) it is expected to realize a net profit of RMB 1.188 billion-1.426 billion, with a year-on-year increase of 150% - 200%. We believe that the rising cost of raw materials such as titanium concentrate provides a strong cost support for titanium dioxide. Under the background of energy consumption dual control policy and export promotion, the prosperity pattern of titanium dioxide industry is expected to continue. It is suggested to pay attention to industry leaders such as Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) , Lb Group Co.Ltd(002601) with scale and cost advantages.
Market review:
Sector performance: this week, CITIC's basic chemical sector fell by 2.6%, and the composition of the Shanghai Composite Index fell by 0.8%. Compared with the Shanghai Composite Index in the same period, the basic chemical sector fell by 1.8 percentage points. In terms of sub sectors, the basic chemical sub sectors mainly fell this week, with soda ash, cotton fiber, spandex, titanium dioxide, polyester and other sub sectors leading the increase; Carbon fiber, potassium fertilizer, lithium chemicals, inorganic salts, rubber products and other sub sectors led the decline
Rise and fall of individual stocks: the basic chemical sector led the rise this week, including Goody Science & Technology Co.Ltd(002694) , Inner Mongoliayuan Xing Energy Company Limited(000683) , St red sun, Longyan Zhuoyue New Energy Co.Ltd(688196) , St Dewei, etc; Leading losers include Shaanxi Meibang Pharmaceutical Group Co.Ltd(605033) , Sinomach General Machinery Science & Technology Co.Ltd(600444) , Aba Chemicals Corporation(300261) , Shanghai Hiuv New Materials Co.Ltd(688680) , Changjiang materials, etc.
Risk tips: the risk of fluctuations in international oil prices, the risk of repeated global epidemics, etc.
