On November 15, the Secretariat of the General Office of the Jiangxi Provincial people's Government issued the Circular of the General Office of the Jiangxi Provincial people's Government on abolishing document Ganfu Office (2017) 112. it is pointed out that in order to cooperate with the provincial government's "implementation opinions on promoting the High-quality Development of rare Earth Industry", it was decided to abolish the Circular of the General Office of Jiangxi Provincial people's Government on further strengthening the production, Operation and Management of rare Earths from the date of issuance of the notice.
The annulment of the "notice" means the resumption of new project approval, and the company's rare earth recycling capacity is expected to expand rapidly. The decision to abolish the "notice of the General Office of the Jiangxi Provincial people's Government on further strengthening the production, Operation and Management of rare Earths" was issued in October 2017. at that time, under the background of overcapacity in rare earth smelting and separation and low prices in successive years, the management of resource recycling projects was relatively strict, requiring 1) to stop the establishment of projects, including off-site relocation projects, and 2) to reduce the number of enterprises. Through merger and reorganization, reduction and replacement, conversion and other ways to reduce the number of resource recycling enterprises and improve the concentration of the industry. The annulment of the notice means that the company can start submitting project applications for new capacity again.
The price of rare earths has continued to rise recently, and the reuse of rare earths is expected to maintain a high bearing. The price of rare earth oxides has risen rapidly since mid-October, and the price of praseodymium neodymium oxide reached 7.85 million yuan per ton on November 16, up 31 percent from about 600,000 yuan per ton at the end of September, according to the business society. New energy vehicles and industrial robots continue to drive the demand for magnetic materials. according to the Bureau of Statistics, the output of new energy vehicles in October was 408000, which continued to reach an all-time high. From January to October, the cumulative output of new energy vehicles reached 2.7 million. Compared with the same period last year, the total output of industrial robots in October was 300000, which was + 52% compared with the same period last year (+ 97% compared with the same period in 19 years). The high price of rare earths has led to a great change in the profit situation of the rare earth recycling industry this year compared with last year. Xintai Technology made a net profit of 173 million yuan in the first half of the year, and the estimated profit per ton is about 87000 yuan based on the output of 2000 tons, which is much higher than the level of more than 30, 000 in 2020.
Investment advice. After the introduction of the new policy, the company's capacity expansion is expected to accelerate, and at the same time, the recent increase in rare earth oxides is faster than we previously reported, and prudently maintain the judgment of the company's 2021-2023 net profit of 5.3,7.1 and 810 million yuan. maintain a "buy" rating corresponding to the current market capitalization of 23\ 17\ 15x.
Risk tips: 1, the price of rare earths continues to fall; 2, the project is not as expected; 3, the competition pattern of the industry is deteriorating rapidly.
