Long Mang Baili (002601): Titanium Industry Cooperation Enhances Competitiveness, Chloride Production Capacity Expands to Boost Growth

Long Mang Baili (002601): Titanium Industry Cooperation Enhances Competitiveness, Chloride Production Capacity Expands to Boost Growth
Company profile Long Mang Baili announced that it has signed a “Framework Agreement on Cooperation in the Titanium Industry” with Jinchuan Group Co., Ltd., which will build a titanium industry base in the western region with competitiveness and characteristics. The two parties plan to establish a joint venture company, in which Jinchuan Group will invest all existing assets (including land) that are closely related to the production of titanium sponge, and will hold 30% of the equity of the joint venture company.The equity of the joint venture company is 70%. Comments This cooperation is conducive to improving the company’s titanium industry layout and enhancing competitiveness.Jinchuan Group is a large state-owned company in Gansu Province. It is a large-scale picking, selection, smelting, chemical, and deep processing joint enterprise. This cooperation has been transformed into the existing assets of Jinchuan Group Titanium Plant. The existing idle assets are revitalized through cooperation between the two parties, and the investment supporting facilities are perfect.Related industries in the titanium industry chain, build a titanium industry base with competitiveness and characteristics in the western region.According to the content of the agreement, the company will fully resume the production of the existing sponge titanium device and implement the follow-up industrial chain improvement project step by step after the cooperation agreement is officially restarted.We expect that the signing of the framework agreement with Jinchuan Group this time will help the company to further improve the titanium industry layout and enhance the company’s titanium industry competitiveness. The expansion of chloride production capacity has helped the company’s performance growth.The operating rate of the first 10-insert production line of the company’s second-phase chlorinated titanium dioxide has increased to 60%, and the second 10-insertion production line has entered the commissioning stage. At the same time, the company expects that the subsidiary Yunnan Xinli 6 will replace the chlorinated titanium dioxide productionThe line is expected to resume production in January next year, and we expect the company’s increased production capacity to release the chloride method will help continue to grow.At the same time, according to the announcement, the company will use the titanium concentrate resources in the Panxi area to construct a 30-contact titanium chloride slag project, which can fully meet the second phase of 20-chlorination chlorination titanium dioxide production. We expect to further improve the industrial chain to reduce costs and enhance chlorineChemical method of titanium dioxide competitiveness. Demand for titanium dioxide is expected to improve in 2020, and the market share of leading enterprises will continue to increase.The real estate team of CICC expects that the actual physical completed area of houses nationwide will increase by 9% in 2020. Benefiting from the increase in the actual completed area, we expect domestic titanium dioxide demand to improve in 2020; titanium dioxide exports will continue to improve.China ‘s titanium dioxide export volume was 90% in November.3In the beginning, it grows by 6 every year.9%.On the supply side, we expect that in 2020, the titanium dioxide industry will mainly increase its output and concentrate on leading enterprises, which will further increase its market share and voice. Estimates suggest that we maintain our 2019/20 profit forecast26.2 / 3.1 billion US dollars, the current company merger corresponds to 2019/20 price-earnings ratio of 11.5/9.7 times.Maintain target price of 17 yuan, corresponding to 15% growth space and 13 / 11x P / E ratio for 2019/20. Maintain Outperform rating. Risk Titanium dioxide 苏州桑拿网 price exceeded expectations, and the progress of chlorinated titanium dioxide project exceeded expectations.