On April 24, Longbai Group, a leading titanium dioxide company, (002601. SZ) released its 2023 annual report - during the reporting period, the company achieved operating income of 26.765 billion yuan, a year-on-year increase of 11.00%, a total profit of 3.917 billion yuan, a year-on-year decrease of 3.83%, and a net profit attributable to shareholders of listed companies of 3.226 billion yuan, a year-on-year decrease of 5.64%.
Longbai Group is a large-scale diversified enterprise group committed to the R&D and manufacturing of new materials and the deep integration of the industry, and is currently mainly engaged in the production and sales of titanium dioxide, titanium sponge, zirconium products, lithium battery cathode and anode materials and other products. For coating companies, its titanium dioxide business is the most concerned, which is related to the supply of main raw materials for coating production.
According to reports, the chemical name of titanium dioxide is titanium dioxide, the commercial name is titanium dioxide, and the chemical formula is TiO2. Titanium dioxide has a high refractive index, ideal particle size distribution, good hiding power and tinting strength, and is a white pigment with excellent performance, which is widely used in coatings, plastics, papermaking, printing inks, rubber, etc. Since titanium dioxide has many uses closely related to the national economy, the consumption of titanium dioxide can be used as one of the important indicators to measure a country's economic development and people's living standards, and is known as the "barometer of economic development". Among them, coatings are the most important downstream industry of titanium dioxide, accounting for 58%.
Among the many titanium dioxide manufacturers, Longbai Group is the most important one. Its annual report pointed out that the company is a leader in the global titanium dioxide production enterprises, and its titanium dioxide brand "Snow Lotus" is one of the most well-known and influential brands of titanium dioxide products in the global market, with a titanium dioxide production capacity of 1.51 million tons/year and a titanium sponge production capacity of 50,000 tons/year, both of which rank among the top in the world.
In terms of the price of titanium dioxide, which has attracted much attention from the paint industry, Longbai Group also has a very high "right to speak" - in the past 2023, according to the statistics of the "Coating Classic", the price of titanium dioxide has experienced 7 increases (referring to the number of price increases announced in 2023), of which Longbai Group has participated and belongs to the leading one. Regarding the price of titanium dioxide, Longbai Group analyzed and pointed out in the annual report that looking at the development of the titanium dioxide market in 2023, from the price point of view, according to the monitoring of bulk commodity data, the overall price of titanium dioxide market will rise in 2023;
In the first quarter, the market confidence of titanium dioxide enterprises was good, and prices rose. In the second quarter, cost support weakened, demand was average, and prices were lowered. In the third quarter, demand rose, the market improved, trading sentiment was active, and prices rose. In the fourth quarter, the domestic terminal market was thin and market prices fell. In 2023, China's perovskite market will fluctuate, the supply and demand of domestic and imported perovskite will be in a tight balance, and the price of perovskite will remain high and fluctuate in a narrow range.
Because of the many times leading the price of titanium dioxide, how much profit Longbai Group has grabbed from the titanium dioxide business has become a topic of focus in the coating industry, and this can also be found from the annual report of Longbai Group.
Among the 26.765 billion yuan operating income of Longbai Group in 2023, the titanium dioxide business contributed 17.768 billion yuan, with a contribution rate of 66.38%, and the revenue of the titanium dioxide business increased by 9.83% year-on-year. However, Longbai Group did not give the profit of titanium dioxide business, but only gave its operating cost of 12.702 billion yuan, a year-on-year increase of 10.47% (the growth of operating cost was higher than the growth of revenue), and the gross profit margin was 28.51%, a decrease of 0.42% over the same period of last year. Based on this gross profit margin, the gross profit of titanium dioxide business is 5.066 billion yuan.
Longbai Group also did not give the allocation of specific downstream application areas of its titanium dioxide business. According to the total application distribution rate of titanium dioxide products, that is, the proportion of coatings is 58%, then about 3 billion yuan of the gross profit of 5.066 billion yuan of Longbai Group's titanium dioxide business comes from the contribution of the coating industry.
From the perspective of production and sales: in 2023, Longbai Group will produce 1.1914 million tons of titanium dioxide, a year-on-year increase of 20.36%, including 804,000 tons of sulfuric acid titanium dioxide, a year-on-year increase of 18.18%, 387,400 tons of chlorinated titanium dioxide, a year-on-year increase of 25.18%, and a total of 1.1589 million tons of titanium dioxide, a year-on-year increase of 24.93%, of which domestic sales account for 43.53% and international sales account for 56.47% , sales of sulfuric acid titanium dioxide 796,400 tons, an increase of 22.15% year-on-year, sales of chlorinated titanium dioxide 362,500 tons, an increase of 31.48% year-on-year.
Longbai Group has a designed production capacity of 1.51 million tons of titanium dioxide per year, so its capacity utilization rate is 78.90%. According to statistics, Longbai Group is the world's largest titanium dioxide producer in terms of production capacity, and it is also one of the few titanium dioxide suppliers in the titanium dioxide industry that has both sulfuric acid process and chlorination process. The company's chlorinated titanium dioxide production technology is comparable to the international leading level, and at the same time, it can effectively reduce production costs, and realize the growth of the share of domestic chlorinated titanium dioxide products in China and the global market.
The designed production capacity of titanium dioxide of Longbai Group reached 1.51 million tons/year
For the company's development strategy, Longbai Group said that it will rely on the existing core resources and advantages to build a low-cost co-production system of sulfuric acid titanium dioxide, chlorinated titanium dioxide, titanium sponge and high-end titanium alloy, further improve the green large cycle industrial chain, and strive to build a whole industrial chain including "titanium ore mining and processing ~ chlorinated titanium dioxide ~ titanium sponge ~ titanium metal ~ titanium processing". At the same time, under the guidance of the concept of resource recycling and green development, we will uphold the development idea of "whole industrial chain, large cycle and low cost", and actively lay out the new energy industry. The company adheres to the equal emphasis on connotative growth and epitaxial development, and works hard to improve internal skills.
Seize opportunities to carry out horizontal and vertical M&A.
However, the construction of a "low-cost" production system is to serve higher profits, and Longbai Group will not reduce the sales price of titanium dioxide because of this - in less than 4 months into 2024, Longbai Group has led the price of titanium dioxide two or three times - it is foreseeable that the titanium dioxide market in 2024 will still take price increases as the main theme.