In 2021 and 22, the profits of Q1 rare earth sector continued to grow at a high rate: in 2021, the total income of the rare earth sector increased by 45.71% year-on-year, and the net profit attributable to the parent increased by 340.23% year-on-year; The total revenue of Q1 in 2021 increased by 66.14% year-on-year and 34.28% month on month compared with Q4 in 2021; The net profit attributable to the parent company increased by 105.28% year-on-year and 12.70% month on month compared with Q4 in 21 years. In 2021, the gross profit margin and net profit margin of the rare earth sector were 18.95% and 10.88% respectively, with a year-on-year increase of 7.9 and 7.2 percentage points respectively. In 2022, the gross profit margin and net profit margin of Q1 were 22.11% and 10.09% respectively, with a year-on-year increase of 4.1 and 2.4 percentage points, and a month on month decrease of 6.3 and 4.8 percentage points respectively. The high profit growth of the sector comes from the simultaneous rise of price and volume, in which the price increase range is generally 50% – 80%, and the gross profit per unit product increases by 100% – 200% China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) 1 in 2021, the revenue and net profit attributable to the parent company accounted for 50.60% and 78.43% of the sector respectively, while in 2022, Q1 accounted for 48.50% and 61.82%.
Magnetic materials successfully conducted cost pressure, increased profits simultaneously, and accelerated capacity expansion: in 21 years, the total revenue of magnetic materials companies increased by 55.01% year-on-year, and the total net profit attributable to the parent company increased by 50.89% year-on-year; Q1 in 2021 increased by 62.71% year-on-year and 7.27% month on month compared with Q4 in 2021; The net profit attributable to the parent company was 1.167 billion yuan, an increase of 60.85% year-on-year and 21.70% month on month compared with Q4 in 21 years. The growth rate of total output and sales volume of magnetic material sector was 29.0% and 23.9% respectively, and the average price increased by 25.84% year-on-year. The top three companies with the largest price increase were Innuovo Technology Co.Ltd(000795) , Jl Mag Rare-Earth Co.Ltd(300748) and Earth-Panda Advanced Magnetic Material Co.Ltd(688077) ; The gross profit per ton of magnetic materials increased by 18.39% year-on-year. The top three companies with the largest increase in gross profit per ton of magnetic materials are Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) and Innuovo Technology Co.Ltd(000795) . The three companies with the highest gross profit per unit of magnetic materials are Earth-Panda Advanced Magnetic Material Co.Ltd(688077) , Ningbo Yunsheng Co.Ltd(600366) and Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) ; In response to the rapid development demand of the downstream, the magnetic material sector accelerated the construction and R & D investment of projects under construction. In 2021, the projects under construction in the magnetic material sector increased by 83% and the R & D investment increased by 52% year-on-year.
In 2022, Q1 fund reduced its holdings of rare earth permanent magnets: Q2 and Q4 funds increased their holdings of rare earth permanent magnets in 2021, and decreased their holdings in Q3 and Q1 in 2021 and 2022. The top five companies with more holdings of Q1 in 2022, which will be the first five companies with more holdings of Q1 in the year of 2022, in which the first five companies with more holdings of Q1 in the year of 2022, in which the first five companies in the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the, Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) and Hengdian Group Dmegc Magnetics Co.Ltd(002056) .
The downstream demand of Q2 terminal is greatly affected by the epidemic: since March 2022, the downstream production has slowed down due to the epidemic, and the production of magnetic material enterprises in Zhejiang, Shanxi, Beijing, Jiangxi, Inner Mongolia, Guangdong and other places has been reduced by 30% – 60% due to reduced orders or closed management, which has impacted the profits of Q2. Due to the base number, the price of Q2 products is expected to increase by about 50-70% year-on-year, but it is expected to decrease by about 15% month on month Q1. Based on this calculation, we expect the performance of Q2 rare earth and magnetic materials company to continue to increase by about 40% year-on-year and decrease by about 10% month on month Q1. With the mitigation of the epidemic, it is expected that the rare earth and magnetic material industry chain will return to the long-term growth channel. We maintain the leading market-a rating in the industry. It is suggested to focus on China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) in the upstream and Jl Mag Rare-Earth Co.Ltd(300748) and Yantai Zhenghai Magnetic Material Co.Ltd(300224) .
Risk tip: the growth rate of rare earth downstream demand is lower than expected; Technical changes lead to reduction or substitution of rare earth consumption; Quota release exceeded expectations; The centralized release of magnetic material production capacity leads to periodic oversupply.
