\u3000\u3 Guocheng Mining Co.Ltd(000688) 077 Earth-Panda Advanced Magnetic Material Co.Ltd(688077) )
Events
Earth-Panda Advanced Magnetic Material Co.Ltd(688077) released its 2021 annual report on March 22, 2022: in 2021, the company achieved a revenue of 1.655 billion yuan, a year-on-year increase of 111.54%. In 2021, the net profit attributable to the parent company was 152 million yuan, with a year-on-year increase of 191.07%; The net profit attributable to the parent company after deducting non recurring profits and losses was 129 million yuan, with a year-on-year increase of 276.88%.
Key investment points
The annual performance increased significantly, thanks to the strong demand for NdFeB magnetic materials
In 2021, Earth-Panda Advanced Magnetic Material Co.Ltd(688077) Baotou company’s phase I project and Hefei headquarters continued to release the sintered NdFeB production capacity. At the end of the year, the company’s Sintered NdFeB blank production capacity reached 6000 tons, an increase of 50% year-on-year; The output reached 3955 tons, a year-on-year increase of 44.33%. In terms of sales volume, the sales volume of sintered Nd-Fe-B finished products of the company reached 2525 tons, with a year-on-year increase of 62.61%. The company’s production and sales of Nd-Fe-B products increased significantly, mainly due to the continuous increase in product orders and the increase in the delivery of industrial motors, automobile industry and consumer electronics products outside China.
Benefiting from the rise in product prices, the profit per ton increased. Praseodymium neodymium oxide is the main raw material of neodymium iron boron. The average price in 2021 is 580000 yuan / ton, 93.3% higher than that in 2020. As a result, the cost per ton of sintered NdFeB increased by 24.5% to 430000 yuan compared with the previous year, but at the same time, the price per ton in 2021 was 543000 yuan, 26.2% higher than the previous year. Therefore, in 2021, the gross profit per ton of sintered NdFeB products reached 114000 yuan, a year-on-year increase of 28000 yuan. The cost increase is less than the price increase, and the profit per ton of sintered NdFeB products is still increased.
Hefei, Baotou and Ningguo have made concerted efforts, and the scale of Nd-Fe-B has expanded steadily
The company’s high-performance sintered NdFeB magnet project with an annual output of 1500 tons of automobile motor is expected to be put into operation by the end of this year; The 5000 ton high-performance rare earth permanent magnet material project of Baotou company is more than half of the construction progress and is expected to be partially put into operation by the end of the year; In August 2021, the company acquired 75% equity of Ningguo company and started the preparation of 5000 ton high-performance Nd-Fe-B production capacity project. At present, the project filing has been completed and it is expected to be gradually put into operation in 2023. Hefei, Baotou and Ningguo will make concerted efforts. In 2025, the company will build a total capacity of 21000 tons of Nd-Fe-B blank (8000 tons in Hefei, 8000 tons in Baotou and 5000 tons in Ningguo).
Cooperate with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) to build the production capacity of Nd-Fe-B rapid setting alloy sheet to further ensure the supply of raw materials
In 2021, the company and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) continued to deepen cooperation, and the two sides increased 90.36 million yuan in the same proportion to build a high-performance alloy sheet project with an annual output of 8000 tons in Baotou, further ensuring the stable supply of rare earth raw materials of the company. Previously, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) Anhui company, a joint venture between the company and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) purchased praseodymium and neodymium metal raw materials from China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) and produced neodymium iron boron rapid setting strip alloy, which was mainly sold to the company. The capital increase will expand production capacity and further guarantee the company’s raw materials.
Profit forecast
It is predicted that the net profit attributable to the parent company from 2022 to 2024 will be 247, 363 and 436 million yuan respectively, and the EPS will be 309, 453 and 545 yuan respectively. The corresponding PE of the current stock price is 27, 19 and 15 times respectively, which is given the “recommended” investment rating.
Risk tips
1) the company’s NdFeB production capacity is lower than expected; 2) Nd-Fe-B single ton profit fell sharply; 3) NdFeB demand was lower than expected.
