Guojin Securities: Longyanbai layout titanium concentrate and rotor-grade sponge titanium continuous optimization and upgrading upstream and downstream industrial chain

The company announced on August 4 that Sichuan Longyun Mining and Metallurgy, a wholly owned subsidiary, invested 7 million tons of green and high efficiency mineral processing project, adding 1.6 million tons of iron concentrate per year, 400,000 tons of titanium concentrate and 15000 tons of cobalt concentrate. The investment is estimated to be 600 million yuan, and the construction time is 1 year and 7 months. Gansu subsidiary plans to invest in the technical upgrading and transformation project of 30, 000 tons / year rotor sponge titanium, with a total investment of 1.8 billion yuan and a construction period of 4 years.

Comment

The company has added 400,000 tons of titanium concentrate per year, and the cost advantage under the high bearing of titanium ore continues to be strengthened. The company has a production capacity of 650,000 tons / year of titanium dioxide by sulfuric acid process. It is assumed that the unit consumption of titanium dioxide by sulfuric acid process titanium dioxide is 2.35, and the company's newly added 400,000 tons / year titanium concentrate is all used to produce titanium dioxide by sulfuric acid process. It is estimated that the theory of titanium dioxide by sulfuric acid process requires about 1.5275 million tons / year. The company's existing Longyong Mining and Metallurgy and Ruierxin titanium concentrate total 800,000 tons / year. After the addition of 400000 tons / year titanium concentrate, The matching rate of the company's titanium concentrate will be raised from 52.37% to 78.56%. Assuming that the company's own mine titanium concentrate saves 1500 yuan / ton gross profit per ton, the company's acquisition of mines saves 3450 yuan / ton cost per ton of sulfuric acid titanium dioxide, and the addition of 400000 tons of titanium concentrate can increase the company's gross profit by about 600 million yuan. At present, the global supply of titanium ore is still tight, and there are few new production capacity of titanium ore in the world in the future. It is expected that the high bearing of titanium ore will continue to be maintained, and the increase in the production capacity of the company's titanium concentrate will further enhance the cost advantage of the company's titanium dioxide business.

The company builds 30,000 tons / year rotor-grade sponge titanium technology upgrading project to promote the optimization and upgrading of the company's titanium industry chain. Titanium sponge is the basic raw material for the production of refined titanium, which can be made into titanium ingots, titanium rods, titanium powder and other metal titanium materials. At present, the domestic production process of sponge titanium is mainly concentrated in the middle and low-end product market, and rotor-grade sponge titanium is a scarce product in the industry. After the completion of the 30,000 t / a rotor sponge titanium technology upgrading project, it will promote the optimization and upgrading of the company's titanium concentrate-titanium chloride slag-chlorinated titanium dioxide-sponge titanium-titanium alloy industry chain, and achieve the development goal of "making refined titanium products and fine titanium derivatives".

Investment suggestion: the company continues to expand the production capacity of chlorinated titanium dioxide, the new titanium concentrate continues to reduce cost and increase efficiency, the layout of sponge titanium upgrading industrial chain, and the layout of lithium iron phosphate project into the field of new energy materials, with strong long-term growth. It is estimated that the company's net profit for 2021-2023 will be RMB 5.557 billion RMB 6.484 billion, maintaining its "overweight" rating.

Risk hints: the increase in production capacity of the chlorination process leads to overcapacity in the industry; the technical risk of titanium dioxide in the chlorination process and the release progress of the project are not as expected; the demand of the downstream industry is downward; the bearing of titanium ore is declining; the rapid growth of inventory and receivables, equity pledge risk, goodwill impairment risk, major shareholder reduction risk and so on.