Event: the company released its quarterly report for 2022: the company's annual 2022Q1 revenue was 2.35 billion yuan, an increase of 70% over the same period last year, and its mother's net profit was 254 million yuan, an increase of 89% over the same period last year.
Comments:
The performance is bright, and the profit growth continues to be realized. The company's Q1 homing net profit in 2022 was 254 million yuan, which was located in the median of the previously issued performance forecast, exceeding our previous expectations. The company's 2021Q4 return net profit is 140 million yuan, the company has achieved three consecutive quarters of continuous growth from 2021Q2-2022Q1, the company as a leader in rare earth resources to achieve sustained profit growth.
The company is expected to be the first to benefit from the abolition of restrictions. In November 2021, the Jiangxi provincial government issued a document abolishing the Circular of the General Office of the Jiangxi Provincial people's Government on further strengthening the production, Operation and Management of rare Earths. The repeal of the document means that approval of new rare earth recycling projects is possible, and the company, as the leader in rare earth recycling in the industry, is expected to benefit first.
Recycling territory continues to expand: since the acquisition of Xintai Technology in 2020, the company completed the acquisition of 100% equity in Jiangxi Wanhong (6000 tons of waste magnetic materials in 2021) in May 2021; and in February 2022, the company said in an investor question and answer that the company is actively promoting the approval of Wanhong's remaining 6000 tons of production capacity.
Rare earth industry: embrace new energy + energy saving, the boom continues: benefit from the downstream demand boom, rare earth prices are high; even after seasonal adjustment, the average price of praseodymium and neodymium oxide in April is still as high as 860000 yuan, which is still at an all-time high; at present, the inventory of praseodymium and neodymium oxide is only 3411 tons, down 16% from the same period last year. In the medium and long term, downstream demand, especially new energy vehicles and industrial motors, remains high; rare earth supply implements a quota system, especially relative to the rapidly growing demand, the gap between supply and demand is difficult to alleviate in the short term, and rare earth prices are expected to remain high for a long time.
Traditional business: operating steadily. The order volume of scrap processing equipment of the company has achieved rapid growth, and the renewable resources operation business has also achieved new breakthroughs. The company's elevator components business has overcome multiple unfavorable factors such as the shortage of key raw materials and rising commodity prices, and the company's profitability has remained stable.
Profit forecast and investment rating: we predict that the company's revenue from 2022 to 2024 will be 91 billion yuan, an increase of 34%, 21% and 10% respectively over the same period last year. Based on the company's 2022Q1 performance, we raised the company's net return profit for 2022-2023 to RMB1.06 billion from 6.8 to 2023, that is, the company's net homing profit for 2022-2024 was RMB 8.5x10.6 billion, an increase of 60%, 24% and 15%, respectively, and the corresponding PE was 11Unix. Taking into account the continued prosperity of the rare earth industry, the company's recycling business continues to advance, and profits can continue to grow; and for the standard rare earth industry, the company should enjoy a higher valuation as the leader of rare earth resources, so the company maintains its "buy" rating.
Risk hint: rare earth prices fluctuate; the company's business expansion is not as expected.
