industry status
Rare earth prices hit a new high this week. According to SMM, the price of praseodymium and neodymium oxide rose to 915000 yuan / ton on January 19, with a daily comparison of + 1.4% and a weekly comparison of + 0.9%. The price of rare earth magnetic material (50h) was 412500 yuan / ton, flat on a daily and weekly basis.
comments
Myanmar's medical records of infection with Omikron increased, and the disturbance of raw ore imported from Myanmar intensified, driving prices to rise continuously.
According to ruidao metal network, in December 2021, due to the mitigation of the epidemic situation in China and Myanmar, Myanmar mines flowed in slightly, and the shortage of raw ore supply in China was alleviated. However, according to Myanmar Chinese network, the number of infected people in Myanmar has increased again recently. We expect that with the disturbance of the epidemic, the market will again worry about the supply of raw ore imported from Myanmar, and the price of rare earth will continue to rise.
China's rare earth mining index will be released soon. We will pay attention to the marginal impact of the market supply increment brought by the release of the index on supply and demand. According to the release date of indicators of the Ministry of industry and information technology over the years, generally from February to March, we believe that with the continuous rise of rare earth prices, the release time and release growth rate of China's indicators are expected to have a great supply side impact on the rare earth market. In the medium and long term, we believe that China's rare earth mining indicators will continue to be strictly controlled; Although there is potential increment overseas, it is difficult to increase rapidly due to factors such as resources and environmental protection. It is expected that the supply of rare earth will continue to be tight.
Rare earth prices are expected to remain high in 2022, the earnings per ton of magnetic materials will usher in a trend upward, the volume and price of A-share magnetic materials will rise together, and the value of the sector will be revalued. First, considering the rigidity of the rare earth supply side and the recurrence of the epidemic in Myanmar, we expect the rare earth price to remain high in 2022 against the background of high demand. Second, the profit per ton of magnetic materials ushered in a trend upward. The sales price of magnetic material terminal products is generally adjusted according to one month, one quarter, or even half a year. Compared with raw materials, the price increase has obvious lag, which makes the profit per ton of magnetic material significantly suppressed in the process of the sharp rise in the cost of magnetic materials in 2021. Taking neodymium iron boron 50h as an example, the price of praseodymium and neodymium oxide, the main raw material cost, increased by 78% in 2021, while the price of neodymium iron boron 50h increased by only 49%. According to our calculation, the current magnetic material processing fee is at a historically low level. We believe that with the replacement and increase of the magnetic material price contract, the processing fee is expected to return to the average level in recent five years, and the profit per ton of magnetic material is expected to usher in a trend upward. Third, the production and sales of magnetic materials have strong growth. According to the announcements of various companies, the capacity planning of China's mainstream magnetic material companies from 2020 to 2025 has an average annual compound growth rate of more than 20%.
valuation and recommendations
It is suggested to pay attention to Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) , Yantai Zhenghai Magnetic Material Co.Ltd(300224) , Ningbo Yunsheng Co.Ltd(600366) and other companies with strong capacity growth, strong market expansion, significant card position advantages and large profit improvement space per ton of magnetic materials. We adjusted the profit forecast and target price of Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) , Ningbo Yunsheng Co.Ltd(600366) , Yantai Zhenghai Magnetic Material Co.Ltd(300224)
risk
The output of new energy vehicles is lower than expected; Rare earth supply exceeded expectations.
