\u3000\u3000 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) (600111)
Key investment points
The performance exceeded expectations, and the net profit attributable to the parent company in Q4 was RMB 1.725-1.885 billion in a single quarter
According to the performance forecast, the company's net profit attributable to the parent company in 2021 was RMB 4.874-5.034 billion, and the net profit attributable to the parent company after deduction was RMB 4.707-4.867 billion. The company's net profit attributable to the parent company in Q4 single quarter was RMB 1.725-1.885 billion, an increase of 55% - 69% month on month, and the net profit attributable to the parent company after deduction was RMB 1.748-1.908 billion, an increase of 69% - 85% month on month; The company's Q4 performance exceeded expectations. The price of rare earth praseodymium and neodymium oxide in Q4 was 760000 yuan / ton, an increase of 28% compared with 590000 yuan / ton in Q3. We believe that with the demand of downstream replenishment in Q4, the price of rare earth also rose all the way, and the company's volume and price rose together;
The company is the absolute main supplier of national rare earth quota, and its future growth is determined
The growth of rare earth supply in the future mainly depends on the large amount of rare earth products of the company. From the rare earth index in 2021, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) mineral products account for 67% of the light rare earth index, with a year-on-year increase of 36%, and smelting separation products account for 55% of the total index, with a year-on-year increase of 41%. Considering the advantages of rare earth resources and production capacity of the company, it will become the main provider of rare earth supply increment in the future. As a national strategic resource, rare earth is managed by the national quota system for the separation of mining and smelting, so the quota is the most core resource, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) will become the absolute main force of the national quota increment, and the future growth will be determined;
Export data continued to improve, and the rare earth industry, which occupies a dominant position in the world, brought more dividends to China
According to the data of the General Administration of customs, the export of rare earth in November 2021 was 4859 tons, an increase of 86% year-on-year and 12% month on month. The cumulative export from January to November was 45000 tons, an increase of 43% year-on-year; In November 2021, the export of rare earth and its products was 10057 tons, with a year-on-year increase of 51% and a month on month increase of 11.5%. The cumulative export from January to November was 99000 tons, with a year-on-year increase of 42%. More than 90% of the global rare earth industry chain is in China. With the continuous high growth of downstream demand, the rare earth price remains high, and the rare earth industry with a global dominant position will bring more dividends to China;
Profit forecast and valuation
Since December, the price of rare earth has risen steadily, with the average price reaching 850000 yuan / ton. In January 2022, with the effect of stock preparation before the festival, the price of rare earth has risen steadily to 900000 yuan / ton. According to our judgment on the future trend of industry supply and demand, we expect the price centers of rare earth to be 850000 yuan / ton from 2022 to 2023, It is estimated that the company's performance in 2022-2023 will be RMB 8.89/12.8 billion respectively, corresponding to 17x / 12x PE in 2022-2023, maintaining the "buy" rating.
Risk tip: the risk of continuous spread of overseas epidemic, the risk of sharp fluctuations in rare earth prices, and the risk that the downstream demand for new energy vehicles and new wind power installations is lower than expected
