On January 11, Ji’an Xintai Technology Co., Ltd. (hereinafter referred to as Xintai Technology), a wholly-owned subsidiary of Jiangsu Huahong Technology Co.Ltd(002645) (002645. SZ), signed a long-term supply agreement with Ganzhou Keli rare earth new material Co., Ltd. (hereinafter referred to as Ganzhou Keli), an authorized purchaser of apple, which ordered 50 tons of praseodymium neodymium oxide products per month for one year.
The reporter of the daily economic news noted that Jiangsu Huahong Technology Co.Ltd(002645) began planning to acquire Xintai technology in 2019, officially completed the equity change in 2020, and extended its business of comprehensive utilization of waste resources to the field of comprehensive utilization of rare earth waste. Since 2021, the price of rare earth materials such as praseodymium and neodymium oxide has continued to rise. Some research reports believe that there is a long-term gap between the supply and demand of praseodymium and neodymium oxide in the next five years.
sign supply agreement with Apple authorized purchaser
According to the announcement of Jiangsu Huahong Technology Co.Ltd(002645) , since October 2019, Xintai technology has carried out preliminary cooperation and communication with apple, and has successively passed the verification, audit and evaluation of Apple’s product performance, environmental protection, safety and social responsibility, and obtained the supplier qualification. Recently, as a qualified supplier of apple, Xintai technology signed a long-term supply agreement with Ganzhou Keli.
According to the agreement signed by both parties, the term of the agreement is from January 2022 to December 2022. The agreed variety is praseodymium neodymium oxide products, the agreed purchase volume is 50 tons per month, and the specific transaction price is the future spot transaction price.
Data show that on January 7, the highest price of praseodymium and neodymium oxide was 906000 yuan per ton. According to this price, the transaction between Jiangsu Huahong Technology Co.Ltd(002645) and apple is as high as 544 million yuan.
Xintai technology is mainly engaged in the comprehensive utilization of rare earth resources. It refines and produces high-purity rare earth oxides such as praseodymium oxide, neodymium oxide, praseodymium neodymium oxide, dysprosium oxide, terbium oxide, europium oxide, gadolinium oxide, holmium oxide and so on.
“The signing of the long-term supply agreement with Ganzhou Keli is to lock in the future continuous supply of rare earth oxide products of Xintai technology, ensure the stability and sustainability of Xintai technology’s future operation, further highlight the comprehensive strength and industry position of Xintai technology in the field of comprehensive utilization of rare earth resources, and have a positive impact on the company’s future business development.” Jiangsu Huahong Technology Co.Ltd(002645) indicates.
extend business to rare earth industry through acquisition
Xintai technology is a company acquired by Jiangsu Huahong Technology Co.Ltd(002645) by issuing shares and paying cash. In 2019, Jiangsu Huahong Technology Co.Ltd(002645) began planning to acquire Xintai technology and extend its business of comprehensive utilization of waste resources to the field of comprehensive utilization of rare earth waste. In March 2020, the equity change was completed, and the final purchase price was 810 million yuan.
In 2020, the revenue of rare earth waste comprehensive utilization business accounted for 31.46% of the total revenue of Jiangsu Huahong Technology Co.Ltd(002645) that year. In this year, under the influence of the epidemic, Jiangsu Huahong Technology Co.Ltd(002645) still achieved double-digit growth in revenue and net profit.
By the end of June 2021, the revenue of rare earth waste comprehensive utilization business had accounted for 42.06% of the total revenue of Jiangsu Huahong Technology Co.Ltd(002645) and the performance of Jiangsu Huahong Technology Co.Ltd(002645) increased significantly last year. In the first three quarters of 2021, Jiangsu Huahong Technology Co.Ltd(002645) achieved an operating revenue of 4.901 billion yuan, a year-on-year increase of 116.32%, and a net profit of 391 million yuan, a year-on-year increase of 134.71%, of which the net profit in the first quarter increased by more than 7 times.
The company’s performance is mainly affected by two factors. On the one hand, Jiangsu Huahong Technology Co.Ltd(002645) will continue to expand its rare earth resources comprehensive utilization industry in 2021. In January 2021, the company and China Southern rare earth group Co., Ltd. jointly established a holding subsidiary Ganzhou Huazhuo renewable resources Recycling Co., Ltd. in May of the same year, the company acquired 100% equity of Jiangxi Wanhong high tech materials Co., Ltd.
On the other hand, the price of rare earth oxide has been rising rapidly since 2021. On the other hand, the price of rare earth oxide has not continued to rise, especially in 2021. Guosen Securities Co.Ltd(002736) said in a recent research report that the supply of rare earth oxides is strictly controlled. With the rapid development of new energy vehicles and other industries, the demand for magnetic materials has exploded in an all-round way, and the rare earth industry has ushered in fundamental changes. It is expected that there will be a long-term gap between the supply and demand of praseodymium and neodymium oxide in the next five years.
(source: Daily Economic News)
