LB Group - A: Model update - trim TiO2 sales volume and slightly lift ASP in FY26, roll forward PT, stay OW

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LB Group - A: Model update - trim TiO2 sales volume and slightly lift ASP in FY26, roll forward PT, stay OW

Asia Pacific Equity Research

25 June 2026

Overweight

LB Group - A 002601.SZ, 002601 CH

Price (24 Jun 26): Rmb17.36

Model update - trim TiO2 sales volume and slightly

▲ Price Target (Jun-27): Rmb22.00

lift ASP in FY26, roll forward PT, stay OW Prior (Sep-26): Rmb21.60

We trim our TiO2 production/sales and slightly increase our ASP China

forecasts for LB Group in FY26 as the bleak downstream demand Asia Oils

outlook weighs on the TiO2 business. We expect the gross margin to AC Lei Mu

stabilize and stage a mild upturn in late 2H26 through FY27 on easing (86-21) 6106 6319

sulfuric acid costs amid improved shipping conditions in the Strait of lei.mu@jpmorgan.com

Hormuz. We roll forward our PT to Jun-27 at Rmb22 (from Sep-26 SAC Registration Number: S1730521050002

Rmb21.60) and retain an OW rating, due to LB Group’s steady overall J.P. Morgan Securities (China) Company Limited

profitability over the next three years. Entering 2H26, we expect Key Changes (FYE Dec)

domestic TiO2 demand to remain sluggish, while easing logistics Prev Cur Δ

pressure in Hormuz should lower sulfuric acid costs, offering cost relief Adj. EPS - 26E (Rmb) 0.98 0.90 -8.4%

to domestic sulphate method capacity. However, intensified industry Adj. EPS - 27E (Rmb) 1.01 0.96 -4.8%

competition for sulphate method TiO2 could emerge, creating margin

Style Exposurepressure on chloride method products. Looking forward, we expect

relaxation of feedstock cost pressure and steady overseas exports will

cushion earnings volatility, and we project the overall gross margin to

see a mild upturn in 2H FY26/27.

• Production growth headwinds in FY26. We have trimmed our full-

year TiO2 production forecast by 3%.