Event: the company announced on September 29th that the company intends to raise no more than 5 billion yuan in a non-public offering to build the whole industry chain project of energy-grade titanium (alloy) materials with an annual output of 60,000 tons. The specific construction contents include: sponge titanium and supporting production line, titanium (alloy) material ingot production line and so on. The total investment of the project is 7.2 billion yuan, and the construction period is 2 years.
Comments:
The titanium project shortens the construction period, and the company's performance is expected to increase significantly after it is put into production. The company announced on April 2 that it intends to invest 10 billion yuan to build the whole industry chain project of energy-grade titanium (alloy) materials with an annual output of 60,000 tons, which is planned to be invested in three phases with a total construction period of 5 years. This fixed increase plan combines the previous three phases of the project into one, the construction period is shortened to 2 years, and the investment is reduced to 7.2 billion yuan. The company estimates that after the project reaches full production, it is expected to achieve an average annual sales income of 5.689 billion yuan and an average annual net profit of 1.796 billion yuan. The company's net profit will be 1.435 billion yuan in 2021, and the company's performance is expected to double at least on the current basis after the project reaches production.
Rely on the advantage of resources to build a vertical integration industry of mineral materials. The company has been engaged in comprehensive utilization of vanadium titanium magnetite for more than 20 years and is the leader in the production and sales of titanium raw materials in China. In the future, the company will be based on Panxi, horizontal merger and acquisition of resources, vertical extension of the industrial chain, and strive to become an internationally influential vanadium and titanium material production enterprise. After long-term R & D investment, the company has mastered the advanced technology of large-scale production of sponge titanium and titanium materials. This investment project will help the company to realize "ilmenite-titanium (alloy) material".
The vertically integrated industrial chain layout can enhance the company's overall competitiveness and profitability, and at the same time, it is also in line with the strategic planning of Panzhihua region to build a world-class titanium production base and a world-class titanium industrial base.
Reshape the pattern of titanium industry and expand the application field of titanium. There are many titanium production enterprises in China, but the market concentration is low and there is a lack of large-scale enterprises. Especially at present, the domestic mid-stream sponge titanium production enterprises are separated from the downstream titanium processing enterprises, and there is a lack of large-scale full-process titanium production enterprises like the Russian VSMPO-AVISMA company. At the same time, the supply stability and product price volatility of sponge titanium have a negative impact on the development of downstream titanium and terminal application market, resulting in large but not strong titanium industry and low technology integration in China. The company has advantages in mineral resources and energy, and this investment project will be designed and built in accordance with the largest single factory in the world to reduce costs and increase efficiency on a large scale, and at the same time will greatly improve the market supply capacity of titanium products dominated by titanium ingots, reshape the industry pattern, and ensure the stability of raw material supply for downstream end customers, which is conducive to the large-scale application of titanium products in energy fields such as hydrogen energy and oil exploitation.
Profit forecast and investment rating: excluding the contribution of this investment project, we estimate that the return net profit of the company from 2022 to 2024 is 14.83,17.78,1.983 billion yuan respectively, the EPS is 3.70,4.43,4.94 yuan per share, and the corresponding PE of the current stock price is 9x, 8x, 7x. The company's "buy" rating is maintained considering the long-term high price of titanium concentrate, the expected value of vanadium, and the performance contribution of titanium alloy and iron phosphate projects after they are put into production.
Risk factors: the construction progress of the fund-raising project and the new depreciation may lead to the risk that the performance can not meet the expectations; the risk that the land use right certificate and EIA approval for the fund-raising project have not yet been obtained.