\u3000\u3 China Vanke Co.Ltd(000002) 978 Sichuan Anning Iron And Titanium Co.Ltd(002978) )
Event: the company announced on May 18 that it plans to invest 500 million yuan to promote the first phase of the lithium iron phosphate project to build an iron phosphate project with an annual output of 50000 tons.
Comments:
The company extends to the lithium iron phosphate industrial chain with ferrous sulfate, a by-product of Dongfang titanium industry as the raw material. The main body of the project is Anning new energy, a wholly-owned subsidiary of the company. The company plans to build a 50000 ton iron phosphate project in yizhishan Industrial Park, Miyi County, Panzhihua with its own or self raised funds. The project starts construction after obtaining legal and compliant construction procedures. The planned construction period of phase I project is 12 months. The company uses ferrous sulfate, a by-product of titanium dioxide produced by Panzhihua Dongfang Titanium Industry Co., Ltd. ( Sichuan Anning Iron And Titanium Co.Ltd(002978) holding 35% and Pangang Group Vanadium Titanium & Resources Co.Ltd(000629) holding 65%) as raw material to produce iron phosphate. Each ton of titanium dioxide produced by sulfuric acid method will produce about 3 tons of ferrous sulfate as a by-product. At present, Dongfang titanium industry has a titanium dioxide production capacity of more than 100000 tons / year, which can meet the company’s demand for iron phosphate raw materials at full capacity.
Under the new energy business cycle, the profit of iron phosphate industry is improved and the demand is strong. At present, the capacity utilization rate of iron phosphate enterprises is high. According to Baichuan Yingfu, the current capacity of iron phosphate in China is 628000 tons / year, and the industrial operating rate in April was 81.21%. The main leading companies include Hunan Yacheng, Hunan Yuneng, Guizhou anda, etc., and the current capacity is more than 100000 tons / year. Benefiting from the strong demand for new energy vehicles and the increase in the installed proportion of lithium iron phosphate, the price of iron phosphate has risen sharply. In 2020, the price of iron phosphate fluctuated slightly around 1.2 yuan / ton. The price of iron phosphate began to rise from 2021, rose to 27000 yuan / ton in October 2021, and the average price from 2022 to now is 23900 yuan / ton. In 2020, the average gross profit of iron phosphate industry was 1695 yuan / ton, which has risen to 7039 yuan / ton in 2022, and the profit level has increased significantly. In addition, driven by the development of new energy vehicles and energy storage, the demand for iron phosphate will continue to maintain high growth.
The company distributes titanium materials with the advantage of titanium source and lithium battery materials with the advantage of iron source. The company’s traditional main business is titanium concentrate and vanadium titanium iron concentrate (61% grade). In April 2022, the company announced that it plans to invest 10 billion yuan to build the whole industrial chain project of energy grade titanium (alloy) materials with an annual output of 60000 tons, which will successfully extend to the downstream of the titanium industrial chain with the advantage of titanium resources. After the project is put into operation, the company is expected to become the world’s largest sponge titanium manufacturer and reshape the industry pattern. The layout of the iron phosphate project can give play to the advantages of the company’s iron source and expand its business to the energy storage battery and power battery industry chain. It can not only use the subsidiary’s by-product ferrous sulfate to complete the vertical extension, but also successfully catch the “lithium battery” boom train to complete the horizontal expansion and improve the company’s ability to resist periodic fluctuations. At present, the installed capacity of lithium iron phosphate has exceeded that of ternary materials, and the demand for iron phosphate is strong. The price and profitability of iron phosphate may remain high. After the project is put into operation, it will contribute a large performance increment to the company.
Profit forecast and investment rating: without considering the performance contribution of titanium alloy project and iron phosphate project, we expect the net profit attributable to the parent company in 20222024 to be 1.703 billion yuan, 1.842 billion yuan and 1.973 billion yuan respectively, EPS to be 4.25, 4.59 and 4.92 yuan / share, and PE corresponding to the current stock price to be 8x, 7x and 7x. Considering that the price of titanium concentrate is expected to continue to rise, the future performance contribution of titanium alloy and iron phosphate, and the epitaxial and endogenous expansion ability supported by the company’s excellent financial situation, the “buy” rating of the company is maintained.
Risk factors: the price of titanium concentrate or iron concentrate falls; The price of iron phosphate fell; The demand for titanium dioxide decreased; The commissioning progress of iron phosphate and titanium alloy project is less than expected.
