\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 48 Jl Mag Rare-Earth Co.Ltd(300748) )
The company is a leading global supplier of high-performance Nd-Fe-B permanent magnet materials
The company is a leading supplier of high-performance NdFeB permanent magnet materials in the field of new energy, energy conservation and environmental protection. Its products cover the application fields of new energy vehicles, wind power, energy-saving frequency conversion air conditioning and so on. Benefiting from the high outlook of the downstream industry, the company’s performance continued to grow at a high speed. In 2021, the company achieved an operating revenue of 4.08 billion yuan, a year-on-year increase of 68.78%, and cagr46.7% in 20182021 81%； In 2021, the net profit attributable to the parent company was 453 million yuan, a year-on-year increase of 85.32%, and cagr45.5% in 20182021 46%。
The market space of high-performance NdFeB is broad, and the head manufacturers accelerate the expansion of production
Thanks to the strong downstream demand in the field of new energy, energy conservation and environmental protection, the global demand for high-performance Nd-Fe-B is expected to reach 181000 tons in 2025 and 21.29% CAGR in 20202025. Among them, the field of new energy vehicles is expected to become the largest application market of high-performance NdFeB in 2022, and the proportion is expected to exceed 35% in 2025. The high-performance Nd-Fe-B market has a high entry threshold, and the head company with resources and cost advantages accelerates the expansion of production. In 2021, the total production capacity of neodymium iron boron blanks of China’s five leading companies will be 74500 tons. It is estimated that the total production capacity of the five companies is expected to exceed 157000 tons in 2025.
The three major areas have continued to make efforts, and the new energy vehicle business has entered a period of performance explosion
The company is deeply engaged in the fields of new energy vehicles, wind power generation and energy-saving variable frequency air conditioning, and has in-depth cooperation with Tesla, Xinjiang Goldwind Science And Technology Co.Ltd(002202) , Midea and other leading customers. In 2020, the company’s market share in the field of wind power and energy-saving variable frequency air conditioning ranked first in the world, and the market share in the field of new energy vehicles ranked second in the world. In the field of new energy vehicles, the company is a magnetic steel supplier of driving motors for new energy vehicles such as Tesla, Byd Company Limited(002594) , United Automotive Electronics and Nippon power products. Saic Motor Corporation Limited(600104) , Weilai and ideal vehicles are the end users of the company. In September 2020, the company signed the parts purchase agreement with Tesla for the first time; In December 2021, the company received the fixed point notice of Japan’s power industry.
Continue to expand production, open the bottleneck of production capacity, and ensure the supply of rare earth through strategic cooperation
The company’s grain boundary penetration technology is the world’s leading. At present, more than half of its products use grain boundary penetration technology to effectively reduce production costs. Benefiting from strong downstream demand, the company’s production capacity continued to expand. By the end of 2021, the rough production capacity of the company has reached 15000 tons; By 2025, the company’s production capacity is expected to increase significantly to 40000 tons, and cagr27.5% in 20212025 79%。 The continuous expansion of production capacity helps the company open the bottleneck and ensure the continuous growth of performance. Rare earth, as a national strategic resource, is subject to strict quota control. The company signed long-term supply agreements with Nanfang rare earth and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) to fully guarantee the supply of rare earth raw materials.
Profit forecast and valuation
The company is a leading supplier of high-performance NdFeB in the fields of China Shanxi Guoxin Energy Corporation Limited(600617) and energy conservation and environmental protection. The business of new energy vehicles and new energy wind power is expected to drive the rapid growth of the company’s performance. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 711 million yuan, 903 million yuan and 1138 million yuan respectively, and the EPS from 2022 to 2024 will be 0.85, 1.08 and 1.36 yuan / share respectively, corresponding to 32, 26 and 20 times of PE respectively. The company has a strong new energy attribute. The average PE of comparable companies in 2022 is 36 times. Considering the performance growth and safety margin of the company, we give the company an average industry valuation of 36 times in 2022, with a target market value of 25.6 billion yuan, which corresponds to 13% of the current market value.
Risk warning: the price of raw materials rises; Downstream demand is lower than expected; Customer expansion was less than expected.
