\u3000\u3000 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) (600111)
Key investment points
The transaction price with Inner Mongolia Baotou Steel Union Co.Ltd(600010) rare earth concentrate falls to the ground, and the investment value of the company remains unchanged
Considering that the price of light rare earth praseodymium and neodymium oxide has increased from 310000 yuan / ton in 2020 to 590000 yuan / ton in 2021, while the average price of praseodymium and neodymium oxide in December 2021 was 850000 yuan / ton, and the purchase price of China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) and Inner Mongolia Baotou Steel Union Co.Ltd(600010) concentrate has increased from 16300 yuan / ton in 2021 to 26900 yuan / ton, according to our calculation, the cost of a single ton of praseodymium and neodymium oxide for the company has increased by about 50%;
The company is the absolute main supplier of national rare earth quota, and its future growth is determined
The growth of rare earth supply in the future mainly depends on the large amount of rare earth supply of the company. From the rare earth index in 2021, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) mineral products account for 67% of the light rare earth index, with a year-on-year increase of 36%, and smelting separation products account for 55% of the total index, with a year-on-year increase of 41%. Considering the advantages of rare earth resources and production capacity of the company, it will become the main provider of rare earth supply increment in the future, Quota is the core asset of rare earth industry. As a national strategic resource, the state manages the separation of mining and smelting by quota system, so quota is the most core resource, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) becomes the absolute main force of national quota increment, and the future growth is determined;
Export data continued to improve, and the rare earth industry, which occupies a dominant position in the world, brought more dividends to China
According to the data of the General Administration of customs, the export of rare earth in November 2021 was 4859 tons, an increase of 86% year-on-year and 12% month on month. The cumulative export from January to November was 45000 tons, an increase of 43% year-on-year; In November 2021, the export of rare earth and its products was 10057 tons, with a year-on-year increase of 51% and a month on month increase of 11.5%. From January to November, the cumulative export was 99000 tons, with a year-on-year increase of 42%. More than 90% of the global rare earth industry is in China, and the rare earth industry with a global dominant position has entered a long business cycle;
Profit forecast and valuation
Since December, the price of rare earth has risen steadily and the downstream has been actively replenished. According to our judgment on the future supply and demand trend of the industry, we expect the price center of rare earth to be 59850900000 yuan / ton from 2021 to 2023. Considering the increase in cost after the increase in the price of Inner Mongolia Baotou Steel Union Co.Ltd(600010) and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) trading concentrate, we expect the company's performance in 2021-2023 to be 48 / 89 / 12.8 billion yuan respectively, The corresponding PE from 2021 to 2023 is 32x / 17x / 12x respectively, maintaining the "buy" rating.
Risk tip: the risk of continuous spread of overseas epidemic, the risk of sharp fluctuations in rare earth prices, and the risk that the downstream demand for new energy vehicles and new wind power installations is lower than expected
