\u3000\u30003 Shenzhen Leaguer Co.Ltd(002243) 00224)
Event: Yantai Zhenghai Magnetic Material Co.Ltd(300224) disclosed the annual report of 2021. In 2021, the company realized an operating revenue of 3.37 billion yuan, a year-on-year increase of 72.46%; The net profit attributable to the shareholders of the listed company was 265 million yuan, a year-on-year increase of 99.22%. Among them, the revenue of 21q4 was 969 million yuan, a year-on-year increase of 58.85% and a month on month increase of 3.33%; The net profit attributable to the parent company was 81 million yuan, with a year-on-year increase of 127.64% and a month on month increase of 17.44%; In 2021q4, the non net profit deducted was 74 million yuan, with a year-on-year increase of 231.99%. The company’s performance is in line with expectations.
Continuous and large-scale help the rapid improvement of the company’s performance. The company’s base in Yantai continued to increase its production capacity by 6000 tons in 21 years. By the end of 21 years, the company’s production capacity had reached 16000 tons (YoY + 60%). Benefiting from the continuous high prosperity in the downstream, the company maintained full production. In 21 years, the company produced 10921 tons of neodymium iron boron permanent magnet materials (excluding components), with a year-on-year increase of 63.71%.
Rare earth prices rose sharply and the gross profit rate fell slightly. Rare earth is the main raw material of Nd-Fe-B magnetic materials, accounting for nearly 80% of the material cost. During the reporting period, the price of rare earth increased significantly. The average price of praseodymium and neodymium oxide increased from 3108 → 596300 yuan / ton (YoY + 91.86%), terbium oxide increased from 46417 → 8714000 yuan / ton (YoY + 87.73%), and dysprosium oxide increased from 18159 → 2655400 yuan / ton (YoY + 46.23%). The downstream products of the company are mainly automobile products, and the price adjustment cycle of products is relatively long, The price adjustment of products lags behind the change of rare earth prices. Therefore, the gross profit margin of the company decreased by 3.18 PCTs year-on-year from 21.94% to 18.76%. With the steady price adjustment of the company, the gross profit margin is expected to rise.
The ability of expense control was improved, and the expense rate during the period decreased by 4.91 PCTs year-on-year. In 2021, the company’s expense ratio was 10.67%, with a year-on-year decrease of 4.91%. Except for financial expenses, the other three expenses decreased. The R & D expense ratio was 5.31%, down 1.95 PCTs year on year; The sales expense ratio was 1.23%, with a year-on-year decrease of 0.59 PCTs; The rate of administrative expenses was 3.60%, a year-on-year decrease of 2.84 PCTs; The financial rate was 0.52%, with a year-on-year increase of 0.47pcts.
The big county business improved and the loss range narrowed. According to the needs of strategic customers, Shanghai daxun has carried out the research and development or production of new energy electronic control platform and related products, and obtained corresponding technology development income. The company has undertaken several product development projects. The operating income of new energy vehicle motor drive system business has increased by 228% compared with the same period last year. Daxun has suffered a loss of 36.65 million yuan in 21 years, a decrease of 60% compared with the same period last year.
The product structure was further optimized, and the proportion of new energy vehicles was further increased. In the past 22 years, the sales volume of high-performance NdFeB magnetic materials in the automotive field of the company was 6602 tons, with a year-on-year increase of 70.09%, and the revenue in the automotive field accounted for more than 50%. Among them, the operating revenue in the new energy vehicle field was 1.103 billion yuan, with a year-on-year increase of 110%, and the revenue accounted for from 27.16% → 33.39%, with a year-on-year increase of 6.24 PCTs.
Steady progress was made in capacity expansion. At present, the company has a blank production capacity of 16000 tons in Yantai base, an increase of 60% over the previous year; It is estimated that the company’s production capacity will reach 24000 tons by the end of 2022 (18000 tons in Yantai base + 6000 tons in Nantong base). In addition, the project of 18000 tons of high-performance Nd-Fe-B permanent magnet material production base built by the company in Nantong has been steadily promoted, and it is planned to put into operation another 6000 tons in 2023. The total planned capacity of the company is expected to reach 36000 tons by 2026, with a CAGR of 17.61% from 21 to 26 years.
Profit forecast and investment suggestions: considering that the company’s capacity expansion exceeds expectations and the superimposed magnetic material price further rises, assuming that the output of neodymium iron boron magnetic materials in 2022 / 2023 / 2024 is 16000, 22000 and 28000 tons respectively, the net profit of the company in 2022 / 2023 / 2024 is expected to be 511, 743 and 983 million yuan respectively (the value before the performance forecast of 22-23 years is 418 and 526 million yuan). As of March 30, 2022, the market value of the company was 11.1 billion yuan, corresponding to 22 / 15 / 11x PE from 2022 to 2024, maintaining the “buy” rating of the company.
Risk warning events: price fluctuation of main products, raw material cost fluctuation, industrial policy change, project progress is less than expected, demand calculation deviation, and the risk of lag in the use of public information in the research report.
