\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 111 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) )
Both volume and price rose, and the performance reached a record high in 2021. In 2021, the demand for rare earth was strong, the price of praseodymium and neodymium rose sharply, the company increased production and efficiency, and achieved a significant increase in performance. The company achieved an annual operating revenue of 30.408 billion yuan, a year-on-year increase of 38.83%; The net profit attributable to shareholders of listed companies was 5.13 billion yuan, a significant year-on-year increase of 462.32%. In 2021q4, the net profit attributable to the parent company was 1.981 billion yuan, an increase of 77.95% month on month. In 2022q1, the company expects to realize a net profit attributable to the parent company of 1.525 billion yuan to 1.725 billion yuan, maintaining a high level. In addition, the company plans to distribute a cash dividend of 4.45 yuan (including tax) for every 10 shares.
The resource supply is stable and the cost advantage is obvious. The raw material rare earth concentrate of the company is purchased from Inner Mongolia Baotou Steel Union Co.Ltd(600010) and the raw material supply is stable. In 2021, as the price of rare earth products continued to rise, the price of concentrate rose sharply. The company negotiated to adjust the price of rare earth concentrate to 2688720 yuan / ton (dry weight, REO = 51%) excluding tax from January 1, 2022. At present, the price of Baotou mixed rare earth carbonate concentrate (50%) is 63600 yuan / ton, which is much higher than the agreed price of the company’s concentrate. In the past, the concentrate price was basically adjusted annually, and the company can fully enjoy the performance growth space brought by the rise in the price of rare earth products.
With the increase of output and the extension of industrial chain, the company has the ability to grow. As an industry leader, relying on Bayan Obo mineral resources, the company has maintained an ideal growth rate of quota. Most of the increment of the first batch of rare earth mining total amount control indicators in 2022 comes from China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) mining indicators are 60210 tons, with a year-on-year increase of 36.44%, an increase of 20% compared with half of the annual volume in 2021 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) the mining index accounts for 67.42% of the total light rare earth mining index. In addition, in order to strengthen the advantages of the industrial chain and improve the added value of products, the company continues to accelerate the layout of the permanent magnet industry. At present, the company has a magnetic material alloy production capacity of 41000 tons.
Policy orientation suppresses rare earth prices and is optimistic about the long-term development of the industry. In March 2022, in view of the continuous rise and high market price of rare earth products, the rare earth office of the Ministry of industry and information technology interviewed rare earth enterprises and required relevant enterprises to jointly guide product prices to return to rationality and promote the sustainable and healthy development of rare earth industry. Affected by this, the market sentiment has changed significantly, and the enthusiasm of downstream procurement and replenishment has weakened. With the strengthening of the game between upstream and downstream, the rare earth price has been significantly corrected. However, we also see that the supply of rare earth industry is orderly, and the development of new energy industry accelerates to increase the demand for magnetic materials. Affected by the policy, the price of rare earth has dropped, but the expected price adjustment range may be limited under the support of fundamentals.
Risk tip: the demand growth of magnetic materials is less than expected; The price of rare earth fluctuates sharply; The growth rate of the company’s mining quota was lower than expected.
Investment suggestion: with the explosion of demand for magnetic materials, the value of rare earth ushers in revaluation. As the industry leader, the company has outstanding resource advantages and the quota continues to grow. Considering the recent price changes of rare earth products, we slightly lowered the original profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 7.15/89.2/11.12 billion, with a year-on-year growth rate of 39.3/24.8/24.7%; The current share price corresponds to PE of 18.0 / 14.4 / 11.6x, maintaining the “buy” rating.
