The company is a leading company in the field of rare earth recycling and scrap processing, which has formed two major renewable resources business and elevator parts business. The scrap processing equipment of the company has a market share of about 30%, which is the leader in this field. At the same time, it has completed the layout of the whole industry chain of automobile disassembly and scrap processing operation. In the field of rare earth recycling, the company has a waste disposal capacity of more than 20, 000 tons, has a production capacity of 5500 tons of praseodymium oxide, and has a market share of more than 25%. It is an absolute leader in the industry, opening up the rare earth recycling industry chain of waste collection-rare earth recovery-magnetic material processing. At the same time, Wilman, a subsidiary of the company, is the leader in the field of elevator parts.
Under the background of double carbon, the demand for rare earths is improving, and the demand for new energy vehicles and industrial motors is greatly increased. China's rare earth mining and smelting capacity occupies a leading position in the world, and the global short-term supply increment mainly comes from the growth of domestic total control indicators. In 2022, the total amount control targets of the first batch of rare earth mining and smelting separation were respectively 100800 tons, an increase of 20% over the same period last year. On the demand side, the prospect of rare earth materials is good under the background of carbon neutralization. high-performance rare earth permanent magnet materials are core materials in the fields of new energy, energy saving and environmental protection: we estimate that new energy vehicles are the downstream of the largest increase in demand for rare earth permanent magnet materials, and the demand for praseodymium and neodymium is expected to reach 246,600 tons in 2025. The demand for praseodymium and neodymium for rare earth permanent magnet industrial motors is expected to reach 15000 tons in 2025. The demand for praseodymium and neodymium in wind power permanent magnet machines is expected to double to about 12000 tons in 2025.
The remarkable high growth of carbon reduction in electric furnace steelmaking determines that the scrap industry chain is expected to continue to boom. the iron and steel industry accounts for 15% of the country's carbon emissions, accounting for the largest proportion of the manufacturing industry. The carbon emission intensity of long process steel per ton steel is about 1.46t CO2/ ton steel, while that of short process electric furnace ton is 0.08.The carbon reduction effect is significant. Therefore, the development of electric furnace steel is an effective means to promote carbon emission reduction in the industry.
A number of policies such as the guidance on promoting the High-quality Development of the Iron and Steel Industry encourage the development of short-process steelmaking. Scrap is the main carbon raw material for short-process EAF steelmaking, which will significantly benefit from the increase of EAF steel production capacity. In 2021, the scrap steel used in steelmaking in China is about 233 million tons, accounting for 22.56% of crude steel output. This level has much room for improvement compared with the international average level of 36%. At the same time, China has entered a high growth cycle of automobile scrap, which will also become one of the important growth points of the scrap industry chain.
Judgment and rating description of industry valuation
It is estimated that the company's net return profit from 2021 to 2023 is 532 million, 711 million and 928 million respectively, corresponding to PE of 19x, 14x and 11x. With reference to comparable companies, the company has certain valuation advantages, and the high growth of rare earth recycling and scrap business is determined, covering it for the first time and giving it a "recommended" rating.
Risk Tips:
The price of rare earth fluctuates more than expected, and the risk of poor control of gross profit margin of scrap and elevators.
