\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 111 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) )
Event: China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) released the 2021 annual report. The company’s operating revenue was 30.408 billion yuan, an increase of 38.83% year-on-year. The net profit attributable to the parent company was RMB 5.13 billion, a year-on-year increase of 462.32%. (after the performance adjustment in 2020) comments: the performance in 2021 increased significantly year-on-year, and the net sales interest rate reached a new high in recent ten years, mainly due to the simultaneous rise in the volume and price of the company’s rare earth products: according to the listing price disclosed by the company every month, the listing prices of praseodymium neodymium oxide and metal praseodymium neodymium were 816900 yuan / ton and 995000 yuan / ton respectively in December 2021, an increase of 85.2% and 82.6% respectively compared with January 2021. In 2021, the company achieved a total sales volume of 42000 tons of rare earth oxides, with a year-on-year increase of 95.6%; The sales volume of rare earth salt was 74000 tons, a year-on-year increase of 15.9%; 20000 tons of rare earth metals, a year-on-year increase of 16.3%.
The dual advantages of resources and quotas continue the leading position in the industry: Baotou Iron and Steel Group, the controlling shareholder of the company, has the exclusive mining right of Bayan Obo mine, the world’s largest rare earth mine, and the franchise of rare earth products in Inner Mongolia. The subsidiary of the controlling shareholder Inner Mongolia Baotou Steel Union Co.Ltd(600010) exclusively supplies rare earth concentrate to the company, providing raw material guarantee for the production and operation of the company. In recent years, in the index allocation of the national rare earth mining and production total amount control plan, the index allocation of mineral products and smelting separation products obtained by the company account for more than 50% of the total annual index respectively, and the annual incremental index of light rare earth is centrally rationed to the company.
Integrated development of upper, middle and lower reaches of rare earths to build competitive advantages of the whole industrial chain. The company is one of the few companies in the rare earth industry that integrates rare earth smelting and separation, functional materials, applied products, scientific research and trade. As of the 2021 annual report, the company’s upstream smelting and separation capacity is 120000 tons / year and the rare earth metal capacity is 16000 tons / year; Among the rare earth functional materials in the middle reaches, the capacity of magnetic material alloy is 41000 tons / year, the capacity of polishing material is 32000 tons / year, the capacity of hydrogen storage alloy is 8300 tons / year, and the capacity of rare earth based flue gas denitration catalyst is 12000 m3 / year; Downstream end application products include Ni MH power battery, rare earth permanent magnetic resonance instrument, etc.
The downstream demand is strong, and the main product praseodymium and neodymium oxide will still be in a tight balance between supply and demand in the future: the rapid growth of demand in application fields such as downstream new energy vehicles, wind power and green household appliances is expected to maintain a tight balance between supply and neodymium oxide. At the same time, the introduction of motor energy efficiency improvement plan (20212023) also makes rare earth permanent magnet industrial motors a new growth engine. According to our calculation, the global demand for praseodymium and neodymium oxide will be 123000 tons in 2025 and cagr14.5 tons in 20202025 3%, still higher than the supply growth rate of 13.8%.
Profit forecast and rating: as the listed price of rare earths of the company remains stable at a high level in 2022, we maintain the profit forecast. It is estimated that the EPS will be 2.02 yuan and 2.64 yuan from 2022 to 2023 respectively. The new profit forecast for 2024 is estimated that the EPS will be 2.68 yuan in 2024, corresponding to 18 times, 13 times and 13 times of 20222024pe. In view of the company’s leading position in the rare earth industry, we maintain the “overweight” rating.
Risk warning: downstream demand is less than expected; Industry supply is released too quickly; The price of rare earth products fell; The project construction of the company is less than expected; Safety and environmental protection risks; Technology path change risk, etc. Company profit forecast and valuation summary
