Dragon Python Bailey (002601): Established a subsidiary with Jinchuan Group to improve the layout of the titanium industry

Dragon Python Bailey (002601): Established a subsidiary with Jinchuan Group to improve the layout of the titanium industry
Conclusions and recommendations: The company recently announced that the company and Jinchuan Group signed the “Framework Agreement on Cooperation in the Titanium Industry”, set up a joint venture subsidiary, accelerate the restructuring and integration of the titanium industry, and build a competitive and unique titanium industry base in the western region.The company’s endogenous extension is concurrently implemented. The endogenous aspect of the company’s second-phase chloride titanium dioxide production capacity production line is gradually put into operation. The subsidiary actively builds high-end titanium alloy projects. The titanium concentrate is upgraded to transform titanium chloride slag projects.Xinli Titanium Industry also established a joint venture with Jinchuan Group. The company continues to lay out the titanium industry chain through endogenous extension to form a core competitiveness with a complete industry chain. It is optimistic about the company’s long-term growth space and maintains a “buy” rating. The joint venture company was established, and the business of titanium sponge has grown rapidly: Jinchuan Group is a large state-owned company in Gansu Province. It is a large-scale mining, processing, smelting, chemical, and deep processing joint enterprise.Assets (including land) are evaluated as capital contribution, and the proportion of equity held in the joint venture company is 30%. The company contributes in cash, and the proportion of equity held in the joint venture company is 70%.Jinchuan Group currently has 0 titanium sponge production capacity.5 Every year, the production capacity reaches 1 after technical reform and re-production.5 Every year / year, the company acquired Xinli Titanium and Titanium Industry in the first half of the year and successfully owned sponge titanium production capacity for the first time. Its 1 ton / year sponge titanium production capacity has been successfully resumed in 10 months, and then expanded to 4 through technical transformation and expansion.5Every year, it can be seen that the company’s titanium sponge production capacity will reach 6 武汉夜生活网 inches per year in the future, and the titanium sponge business can grow rapidly. The price of titanium sponge has risen, and the company’s cost advantage is obvious: the domestic production capacity of sponge titanium in 2017 was 17.2 mm, and the actual effective production capacity is about 11 inches, and the annual operating rate is above 70%. The downstream demand for sponge titanium is mainly titanium. Terminals are invested in chemical and aviation, accounting for about 45% and 18%.The growth rate is about 8%. The aviation industry is driven by the increase in military and civilian aircraft and the proportion of applications. Demand will explode in the future.Due to the tight supply of titanium tetrachloride in the upstream in 19 years, the price of titanium sponge has gradually increased by over 20%. Currently it is about 80,000 tons / ton. Based on the net profit of 2 million tons per ton, each sponge titanium can contribute 20,000.Yuan net profit.The company has developed from titanium ore resources and has a complete upstream and downstream industrial chain of sponge titanium. The cost advantage is prominent. The advantage of shifting production capacity in the future will further enhance the company’s core competitiveness and profitability. The price of titanium dioxide has shifted upwards, increasing production capacity to help increase performance: The company is a domestic double-lead enterprise in the domestic sulfuric acid and chloride titanium dioxide industries, with domestic cities accounting for nearly 30%.Initialization of the first production line 10 of the company’s 20th / annual chlorination titanium dioxide production capacity of the second phase of the company has been successfully put into operation. The current production capacity utilization rate has increased to 60%, and the second production line 10 has entered the commissioning stage.In addition, the newly acquired Xinli Titanium Industry 6 introduction of the chlorination method production line is expected to resume production in January next year. Increasing the release of production capacity will contribute to incremental performance.In terms of price, due to the decrease in global titanium dioxide ore capital expenditure, the upstream raw materials of titanium dioxide have shown a tight trend, forming a favorable support for titanium dioxide. Since the second half of the year, the company has raised prices twice.International customers raised US $ 50 / ton. The current rutile titanium dioxide ex-factory price is 14,650 yuan / ton, which is an increase from the average price in the third quarter.64%, the price center is on the rise. On the demand side, titanium dioxide was gradually exported 90% before the first 11 months.3In the beginning, it grows by 6 every year.75%, of which exports in November increased 17.01%, the export demand is improving, and the new housing construction area in China has maintained a steady growth. The overall demand for titanium dioxide will improve in 20 years.In addition, the company is also actively constructing high-end titanium alloy projects with an annual output of 3, developing high-end titanium alloy materials, and constructing a 50-inch Panxi titanium concentrate upgrade and conversion of titanium chloride slag project to meet its own chlorinated titanium dioxide and high-end titanium alloy projectsRaw material demand, two projects are about 20?Gradually put into production in 21 years, helping the company’s performance continue to grow. Profit forecast: We expect the company to achieve a net profit of 27/20/2127.2/33.4/41.90,000 yuan, +18.8% / + 22.9% / + 25.5%, equivalent to 1 EPS.34/1.64/2.06 yuan, the current potential PE is 11.5/9.4/7.5 times.Considering that the price of titanium dioxide has moved upwards, the company’s new production capacity has been continuously released, and the extension business has helped the company’s performance to continue to grow, maintaining its “Buy” rating. Risk warning: 1. The company’s product price is lower than expected; 2. The new capacity release is lower than expected;