Deeply involved in the vanadium-titanium-magnetite industry, the prospects for the titanium project are promising. For the first time, companies that have been given a “buy” rating are deeply involved in the vanadium-titanium-magnetite industry. The price of the existing product titanium concentrate rises and falls easily, and the price of vanadium-titanium-iron concentrate is also expected to rebound from the bottom. Looking forward to the future, the company's “60,000 tons of titanium project per year” is progressing smoothly, which is expected to help the company take off in a new round. In addition, the company has abundant vanadium-titanium-magnetite resources and corresponding technical reserves for vanadium extraction, and may fully benefit from the rise in vanadium prices in the future. We predict that the company's net profit for 2023-2025 will be 1,264, 13.39 billion yuan, and 2,037 billion yuan, EPS will be 3.15, 3.34, and 5.08 yuan, respectively. The PE corresponding to the current stock price will be 11.9, 11.2, and 7.4 times, respectively. The first coverage gives a “buy” rating.

Titanium concentrate: The supply and demand pattern is tight, and the price of titanium concentrate rises and falls on the supply side. Domestic titanium ore production capacity is concentrated in the four largest mining companies in Panxi. Apart from Longbai Group, the rest of the companies have not announced plans to expand production yet. Overseas, the only production capacity currently under construction is the Ranobe project and the Thunderbird project.

Furthermore, after a long period of mining, some overseas mines are facing the problem of resource depletion. On the demand side, demand for titanium concentrate is mainly titanium dioxide. With the continuous development of the global economy, downstream applications of titanium dioxide are expected to continue to maintain a moderate growth trend, and demand for titanium concentrate is also expected to continue to benefit. Overall, the supply and demand pattern for titanium concentrate is tight, and prices rise and fall easily.

Iron concentrate: The price is at the bottom of the cycle. It is expected that vanadium-titanium-iron concentrate will gradually rebound in the future as a niche variety of iron ore. The price trend is basically the same as that of ordinary iron ore. Looking at the downstream consumption structure of terminal steel, construction, machinery and automobiles accounted for 49%, 17%, and 7% respectively in 2021. Currently, the price of vanadium-titanium-iron concentrate is basically at the bottom of the cycle. Looking forward to the future, along with marginal improvements in the domestic real estate industry and continued growth in infrastructure investment, steel demand is expected to be strongly supported, and the price of vanadium-titanium-iron concentrate may rebound from the bottom.

Titanium project: Demand-driven growth, the company's titanium project prospects are promising. Industry level: Demand for titanium is growing rapidly. Domestic titanium consumption in 2020-2021 reached 9.36 and 124,500 tons, up 35.94% and 32.98%, respectively. On the supply side, at present, the total production capacity of titanium sponge under construction/proposed construction in China has reached 155,000 tons/year. Although there is a large increase in production capacity, along with the accelerated release of demand from terminals in the chemical and aerospace fields, it is expected that the new production capacity will gradually be digested, and the profit level of titanium sponge and titanium materials may continue to remain relatively high. Company level: The company's “60,000-ton titanium project” has significant cost advantages (including self-sufficiency of titanium concentrate, lower electricity prices, full-process production, etc.), and is expected to contribute key performance increases to the company in the future.

Risk warning: macroeconomic recovery falls short of expectations, sharp drop in product prices, falling short of expectations, etc.