\u3000\u3000 Earth-Panda Advanced Magnetic Material Co.Ltd(688077) (688077)
I. Ranran star focusing on rare earth permanent magnet
Founded in 2003, the company has rich technological accumulation and formed a relatively complete industrial chain system: 1) further cooperate closely with the upstream. The company has established a new project with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) with an annual output of 8000 tons of Nd-Fe-B alloy sheet to continuously stabilize the supply of raw materials; 2) More importantly, since 2021, the demand for high-performance sintered Nd-Fe-B in downstream application fields has increased vigorously. The company has seized the market opportunity and actively expanded its production. Its sintered Nd-Fe-B production capacity in Baotou and Hefei has entered a rapid release period: at present, it has a blank production capacity of 6000 tons, and the annual output of 25 is expected to reach 21000 tons; 3) In addition, continuously strengthen product research and development and market development of high-profit products, and "both volume and price" promote the continuous improvement of profitability. The company is one of the eight authorized patent manufacturers of Hitachi Metals in China, which has removed the commercial barriers to enter the overseas market.
II. High performance Nd-Fe-B industry: reshaping the sustained high prosperity
1) sustained high growth: driven by downstream applications such as new energy and energy-saving motors, the demand for high-performance NdFeB is increasing rapidly, and the compound growth rate in 20-25 years may exceed 20%. Specifically, in the field of new energy vehicles, the compound growth rate is as high as 48% in 20-25 years; In the field of energy conservation, according to the latest motor efficiency improvement plan, the demand for NdFeB magnetic materials is expected to reach more than 20000 tons in 23 years, and the compound growth rate in 20-23 years is higher than 50%;
2) sustained high profitability: the supply of Nd-Fe-B is subject to the upstream rare earth resources, and the tight balance between supply and demand is expected to be maintained for a long time. The pricing mode with a certain gross profit margin and the pattern of short supply will promote the profitability of Nd-Fe-B enterprises to a new level: the price of Nd-Fe-B increased from 130000 yuan / ton at the beginning of the year to 340000 yuan / ton, an increase of 162%. The profitability of the industry has expanded from 20000 yuan per ton to 30000-50000 yuan. (we are characterized by the price difference between N35 NdFeB and praseodymium neodymium oxide and other raw materials)
3) the industrial pattern is expected to be reshaped. High performance NdFeB has high requirements for capital, technology and capacity scale, and the rising price of rare earths in the upstream, so the industrial pattern is expected to be reshaped: 1) when small and medium-sized enterprises have difficulties in operation, or withdraw or be merged, and the industry reshuffle is in progress; 2) The corresponding market share of leading enterprises has increased rapidly, and the "Matthew effect" of the industry has further intensified.
III. capacity expansion + product structure optimization, and the company has entered a period of rapid growth
Speed up the layout of capacity expansion to meet the high economic demand. At present, the company has three production bases in Hefei, Ningguo and Baotou. At present, the blank production capacity is 6000 tons, an increase of 50% over the previous year; According to the 22-year planning, the production capacity will reach 8000-10000 tons, and the 25-year production capacity is expected to reach 21000 tons (Hefei 8000 tons + Baotou 8000 tons + Ningguo 5000 tons). The compound growth rate of the company's 20-25-year planning production capacity is as high as 47.58%.
Continuous improvement of product structure: continue to expand the application fields of industrial motors and new energy vehicles. At present, the sales in the above areas account for 53% and will further increase in the future. At the same time, the company has begun to expand to the downstream components of the industrial chain, which will further enhance the profitability of the company.
IV. profit and valuation
We expect the output of NdFeB blank to be 4000 / 7000 / 11000 tons in 21 / 22 / 23. Assuming that the selling price of NdFeB magnetic products in 21 / 22 / 23 is 55 / 60 / 55000 yuan / ton, the total revenue of the company in 21 / 22 / 23 is 16.56/30.04/4.252 billion yuan, a year-on-year increase of 112% / 81% / 42%. The net profit attributable to the parent company was 150 / 34 / 500 million yuan respectively, with a year-on-year increase of 190% / 125% / 48%. Corresponding to the current share price, the PE valuation in 2021 / 2022 / 2023 is 41x / 18x / 12x, which is significantly lower than the average valuation level of comparable companies in the industry (61x in 2021 and 41x in 2022). It is covered for the first time and rated as "buy".
Risk tip: the raw material cost fluctuates, the production capacity release is less than expected, and the industry boom is less than expected. There may be a risk that the public information used in the research report may lag behind or not be updated in time.
