Introduction to this report:
The industry's titanium dioxide exports increased year-on-year in April. The company's resource and cost advantages were obvious, and it maintained an increase in holdings rating.
Key points of investment:
Maintain an “Overweight” rating. Maintain 24-25 EPS at 1.70 and 1.89 yuan, and add 26-year EPS at 2.37 yuan. Referring to comparable companies, the PE valuation was given 14.96 times in 24 years, and the target price was raised to 28.34 yuan (originally 25.00 yuan).
China's titanium dioxide exports increased year-on-year in April. (1) According to customs data, in terms of export volume, titanium dioxide was exported 157,400 tons in April 2024, +22.20% year-on-year, and -19.73% month-on-month, accounting for about 38.83% of the country's output; cumulative exports in January-April were about 647,400 tons, or 14.40% of the country's output. (2) Judging from the average export price, China's average export price of titanium dioxide in April 2024 was about 2,299 US dollars/ton, +2.46% YoY, +1.53% month-on-month; the average export price in January-April was 2,240 US dollars/ton, +3.53% YoY.
The operating rate of the industry declined slightly, and domestic demand was also strong. (1) Supply side: According to Baichuan Yingfu, the operating rate of China's titanium dioxide industry in April was about 84.76%, -3.31pct. In terms of production, April production was 405,300 tons, +18.57% year over year and -0.71% month over month. (2) Demand side: In terms of domestic demand, the apparent consumption of titanium dioxide in April '24 was about 254,700 tons, +16.55% year-on-year and +14.47% month-on-month. The downstream of the titanium dioxide terminal is in the real estate and industrial sector. We believe that with the implementation of local policies, domestic demand may gradually improve over time.
Resources are king, and low-cost leaders continue to grow. The company's titanium dioxide production capacity is 1.51 million tons/year, which is the largest in the world. It has outstanding resource advantages and supports an annual production capacity of more than one million tons of titanium concentrate. According to annual report data estimates, the company's titanium dioxide has an outstanding cost advantage, which exceeds 1,000 yuan all year round. In terms of growth, the company's Fengyuan technical improvement project continues to advance.
Risk warning: Projects under construction fell short of expectations, and EU anti-dumping efforts exceeded expectations.