Matters:
Incidents:
1) On June 17, 2024, the board of directors of Longbai Group reviewed and approved the share repurchase plan. It plans to use its own funds to repurchase RMB common stock (A shares) shares already issued by the company through centralized bidding transactions for equity incentives or employee stock ownership plans. The total amount of repurchase capital is expected to be between RMB 100 million and RMB 200 million, and the price of repurchased shares is not more than RMB 32.10 per share. The estimated number of shares to be repurchased is between RMB 3.115 million and 6.23,000 shares, accounting for 0.13% to 0.26% of the company's total share capital. The repurchase period is within 12 months from the date the board of directors approves the plan. The company has opened a special securities account for stock repurchases and stated that the directors, supervisors, senior management, controlling shareholders, actual controllers and their co-actors have no clear plans to increase or decrease their holdings during the repurchase period, and shareholders holding 5% or more of the company's shares and their co-actors have no clear plans to reduce their holdings over the next six months.
2) On June 17, 2024, the board of directors of Longbai Group deliberated and passed the “Proposal on Investing in the Construction of the Scandium and Vanadium New Material Industrial Park”. It is planned that the company's holding subsidiary Hunan Oriental Scandium Industry Co., Ltd. or its subsidiary will invest 1.08 billion yuan to build projects in stages in Jiaozuo City, including high-purity vanadium pentoxide, vanadium electrolytes, aluminum balls, scandium fluoride, aluminum-based intermediate alloys, and new high-performance aluminum alloys containing scandium. The funding sources are own and self-funded or other equity or debt social financing methods.
3) On the evening of June 13, 2024, the European Commission released factual disclosure materials before the preliminary ruling on the anti-dumping investigation against China's titanium dioxide, showing that it plans to impose additional tariffs on Chinese titanium dioxide companies, of which the Longbai Group plans to impose additional tariffs of 39.7%.
Guoxin Chemical's opinion: 1) The repurchase of shares by the company shows confidence in future stable development and recognition of the company's value. By repurchasing shares, the company can further establish and improve a long-term incentive mechanism, attract and retain outstanding talents, protect the legitimate rights and interests of all shareholders of the company, and promote the stable and healthy development of the company; 2) Investing in the construction of a new scandium vanadium industrial park can improve the company's market competitiveness and profitability, while responding to the country's strategy to promote the development of new energy sources and achieve carbon peak and carbon neutrality goals; 3) EU anti-dumping may affect Longbai Group's market share in the EU region, but the company The core competitiveness of its own production cost advantage and high mine self-sufficiency rate may be addressed through measures such as increasing market share in other regions and arranging overseas production capacity; 4) Up to now, the average price of the domestic titanium dioxide and titanium concentrate market increased year-on-month in the second quarter. Despite a recent drop in the off-season price of titanium dioxide, the price of titanium concentrate is strong, which guarantees the company's profits.
Investment advice: The company's leading position in the titanium dioxide industry is stable, and the self-sufficiency rate of titanium concentrate is gradually increasing. We maintain the company's net profit forecast for 2024-2026 at 40.1/47.5/4.88 billion yuan, corresponding EPS of 1.68/1.99/2.05 yuan, and the current stock price corresponding PE is 11.4/9.6/9.4 X, maintaining a “superior to the market” rating.
Risk warning
Project commissioning fell short of expectations; raw material prices rose; downstream demand fell short of expectations; policy risks, etc.