\u3000\u3 Guocheng Mining Co.Ltd(000688) 077 Earth-Panda Advanced Magnetic Material Co.Ltd(688077) )
Event: on March 21, 2022, the company issued the 2021 annual report. In 2021, the company achieved a revenue of 1.655 billion yuan, a year-on-year increase of 111.5%; The net profit attributable to the parent company was 152 million yuan, a year-on-year increase of 191.1%; The net profit deducted from non parent company was 129 million yuan, with a year-on-year increase of 276.9%. In 2021q4, the company achieved a revenue of 508 million yuan, an increase of 90.5% year-on-year and 19.9% month on month; The net profit attributable to the parent company was 47 million yuan, with a year-on-year increase of 136.2% and a month on month increase of 21.8%; Net profit deducted from non parent company was 37 million yuan, with a year-on-year increase of 344.1% and a month on month increase of 7.5%. The previous performance notice is in line with the previous performance notice.
In 2021, the net profit attributable to the parent company was 152 million yuan, the best performance in history, mainly due to the rise in the volume and price of magnetic materials business. Volume: product output increased year-on-year Earth-Panda Advanced Magnetic Material Co.Ltd(688077) Baotou phase I project and Hefei headquarters sintered Nd-Fe-B production capacity continued to release, providing production capacity guarantee for market development. The company’s annual output of sintered Nd-Fe-B permanent magnet blank was 3955 tons, with a year-on-year increase of 44.33%; At the end of 2021, the blank production capacity was 6000 tons, with a year-on-year increase of 50%. Price and cost: both price and cost have increased, but the price has increased more, and the profit space of single ton has expanded. The average price of praseodymium neodymium oxide in 2021 was 595800 yuan / ton, with a year-on-year increase of 91.8%. The rise of raw materials increased the single ton sales cost of the company’s neodymium iron boron magnetic products by 24.5% to 430000 yuan / ton. At the same time, the price of a single ton also increased by 26.2% year-on-year to 543000 yuan / ton. The increase of unit price exceeded the increase of cost, and the profit space of the unit was expanded.
In 2021q4, the net profit attributable to the parent company increased year-on-year and month on month. In terms of spin off, the increase of net profit attributable to the parent company was mainly due to the increase of gross profit. The increase in gross profit may be mainly due to the simultaneous rise in the volume and price of neodymium iron boron magnetic materials. There are many product models of NdFeB magnetic materials, mainly customized demand, but the price trend is basically similar. Taking the price of NdFeB sintered blank 45h as an example, the average price of NdFeB blank (45h) in 2021q4 is 305.35 yuan / kg, an increase of 29.07% month on month. On a month on month basis, in addition to gross profit, other profit increasing points include other / investment income (+ 2.6 million yuan), changes in fair value (+ 110000 yuan). The main profit reducing points are expenses and taxes (- 14.84 million yuan), income tax (- 3.22 million yuan), non operating profit (- 1.01 million yuan), minority shareholder profit and loss (- 430000 yuan), impairment loss (- 390000 yuan).
The company has deepened cooperation with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) to ensure the stable supply of raw materials. In August 2021, the company and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) jointly increased the capital of China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) Anhui Company in the same proportion ( China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) contributed 60% and the company contributed 40%) to expand the production capacity of Nd-Fe-B rapid setting strip alloy sheet China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) Anhui company is the largest raw material supplier of the company. It mainly provides the company with Nd-Fe-B quick setting strip alloy sheet, which deeply binds China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , and maintains a stable supply of raw materials.
Investment suggestion: the three industrial bases go hand in hand, the downstream new energy vehicles, wind power and industrial motors are booming, and the production and sales of magnetic materials are booming. The company plans to reach the production capacity of 21000 tons of Nd-Fe-B blanks by the end of the 14th five year plan, including 8000 tons / year in Lujiang, Hefei, 8000 tons / year in Baotou and 5000 tons / year in Ningguo. CAGR will reach 36.8%. With the gradual release of production capacity, we expect the company to realize net profit attributable to the parent company of 254 million yuan, 366 million yuan and 456 million yuan from 2022 to 2024, with EPS of 3.17 yuan, 4.58 yuan and 5.71 yuan respectively. The PE corresponding to the closing price on March 23 is 30, 20 and 16 times respectively, maintaining the “recommended” rating.
Risk tip: processing fees fall, production capacity is released, downstream demand does not meet expectations, etc.
