\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 48 Jl Mag Rare-Earth Co.Ltd(300748) )
Performance summary: in 2022q1, the company achieved an operating revenue of 1.51 billion yuan (year-on-year + 90.2%, month on month + 29.9%), a net profit attributable to the parent company of 164 million yuan (year-on-year + 61.6%, month on month + 60.1%), and the corresponding EPS was 0.21 yuan;
In the fast lane of prosperity, the performance increased rapidly: during the reporting period, the demand side of the company's high-performance NdFeB magnetic steel fully benefited from the high popularity of downstream new energy, energy conservation and environmental protection. In terms of sales volume, the gradual release of 8000 tons of production capacity of Baotou factory, high capacity utilization and sufficient product orders have jointly maintained the month on month growth of sales volume. In terms of product price, industry data show that the average price of rough sintered NdFeB N35 in the first quarter increased by about 13.4% month on month. Under the simultaneous rise of product volume and price, the company's revenue increased significantly month on month. In terms of business, new energy vehicles and auto parts performed well, with a single quarter revenue of 450 million yuan (+ 257%), and the sales of new energy vehicle drive motor magnetic steel products can be used to assemble about 487000 new energy passenger vehicles; The revenue of magnetic steel business in the fields of energy-saving variable frequency air conditioning (revenue + 12.7%), wind power generation (revenue + 46.1%), industrial energy-saving motors and energy-saving elevators showed steady and good performance. In terms of product profitability, the gross profit margin of Q1 sales was 19.4% (mom -1.94pcts), and the net profit margin of Q1 sales was 10.9% (mom + 2.10pcts). The decline in gross profit margin was mainly attributed to the rise in raw material prices. Industry data showed that the average price of praseodymium and neodymium oxide Q1 increased by about 29.5% month on month, and the increase in raw material prices was higher than that of sintered neodymium iron boron products. However, we believe that the cost side to downstream transmission is expected to improve with the stabilization of raw material prices and the passage of time. The deviation between net profit rate and gross profit rate is due to the decrease of financial expenses by 88.2% month on month, which is mainly caused by the increase of exchange income. Therefore, the net profit rate has increased month on month;
Financial data: the company's sales expenses decreased by 31,3% year-on-year, mainly due to the reduction of exhibitors, travel and other activities caused by the epidemic; The order growth of high-performance NdFeB magnetic steel business pushed up accounts receivable (+ 32.4%), while the continuous price rise of rare earth raw materials in 2021 led to the year-on-year increase of prepayment (+ 70.3%);
The raised investment project helps to break through the capacity bottleneck: the 8000 ton capacity of the company's Baotou plant has been completed and put into use. At present, the total annual capacity of neodymium iron boron blanks has reached 23000 tons; The project of "new energy vehicles with an annual output of 3000 tons and high-end magnetic materials in 3C field" is expected to be completed and put into operation in 2023. The long-term plan proposes that the total capacity of NdFeB magnetic steel will be increased to 40000 tons in 2025. At that time, the company will become a leading manufacturer of high-performance NdFeB permanent magnetic materials with leading capacity in China. The unit cost reduction brought by the scale effect will help accelerate the release of the company's future performance;
The new energy industry provides the demand side grasp: the high growth rate of various downstream application fields of high-performance NdFeB permanent magnet materials provides a strong grasp for the demand of NdFeB magnetic steel. Under the background of "carbon neutrality", the introduction of relevant policies and the orderly promotion of energy strategy have effectively maintained the rapid development trend of new energy vehicle industry; The motor energy efficiency improvement plan (20212023) has accelerated the penetration of high-efficiency and energy-saving motors in China and provided incremental market space for rare earth permanent magnet motors. Therefore, the company is expected to continue to benefit from the high prospect of the new energy industry;
Investment suggestion: the strong downstream demand has laid an incremental foundation for the market space of rare earth permanent magnet industry. In the future, the continuous operation of raised investment projects will help the company gradually break through the bottleneck of production capacity. We will continue to be optimistic about the future development of the company. It is estimated that the operating revenue of the company from 2022 to 2024 will be 7.11/8.0/9.37 billion yuan respectively, with a year-on-year increase of 74% / 13% / 17%, and the net profit attributable to the parent company will be 6.8/8.6/1.01 billion yuan respectively, with a year-on-year increase of 51% / 25% / 18%, corresponding to pe28x / 22x / 19x. Maintain the "buy" rating.
Risk tips: there is a risk of sharp fluctuations in raw material prices, the progress of raised investment projects is less than expected, the demand for new energy in the downstream is less than expected, and the epidemic situation is repeatedly affected.
