Investment logic
Focus on the development of high performance NdFeB.
Over the past 20 years, the company has spun off the servo motor business and focused on the development of NdFeB business. At present, both revenue and gross profit account for more than 90%. In February 22, the company plans to raise 1.08 billion for the construction of Baotou 15000-ton high-performance NdFeB blank project, which is expected to be put into production by the end of the 23rd. In 22-23, the annual production capacity of NdFeB blank will reach 19000 tons and 34000 tons respectively.
Good financial performance and strong cost control ability. The 21-year company debt ratio (33.2%) is the lowest in the industry, with the net interest rate (13.6%), R & D expense rate (6.2%) and gross profit per ton of NdFeB products (114000 yuan) all in the first place in the industry; the manufacturing cost per ton decreased by 32000 yuan.
New energy vehicles and industrial motors contribute to the main demand increment, and the tight balance between supply and demand continues. It is estimated that the global demand for high-performance NdFeB will be 251000 tons in 25 years and CAGR=23.8% in 4 years. Among them, the share of demand for new energy vehicles and industrial motors increased by 8% and 16% respectively from 21 to 25 years. Rare earth raw materials are controlled by the state and have strong rigidity in supply. China's rare earth permanent magnet production accounts for about 90% of the world, high funding threshold for high-end products, high technical barriers, leading active production expansion, concentration will be further enhanced. It is estimated that the gap between supply and demand of praseodymium-neodymium oxide is 8400 tons in 22 years, and the gap will expand to 15000 tons in 25 years. The high level of praseodymium-neodymium oxide prices is strong after a small correction.
In 21 years, the three major downstream revenue accounted for 22% of new energy vehicles, 31% of consumer electronics, and 47% of industrial applications.
1) New energy vehicles: focus on expanding areas in the future. The company has entered the supply chain of BYD (first supply), NIO Inc., XPeng Inc., mainland and Schaeffler, and cooperated with founder Motor, Wolong Electric Drive and so on. The company's grain boundary diffusion technology can reduce the amount of heavy rare earths by 60%, 70%, improve performance and reduce costs. 2) Consumer electronics: consolidate advantages and ensure share. The company's VCM magnets have a 30% global market share; electroacoustic magnets have stepped up the development of Android mobile phone projects; and mobile phone vibration motor magnets are deeply bound to iPhone. 3) Industrial application: the company is a supplier to CNR Department, Huichuan Technology, Gree Electric Appliances, Panasonic, Mitsubishi Electric and other enterprises. Servo motor market share continues to increase, frequency conversion air conditioning, wind power market achieved major breakthroughs, industrial energy-saving motors, elevator traction machine market expansion steadily.
Profit Forecast & Investment suggestion
It is estimated that the 22-24 year net profit of the company is 542 million yuan, 646 million yuan, 731 million yuan, EPS is 0.55,0.65,0.74 yuan, PE is 19 times, 13 times, 11 times. Given a 22-year 27-fold PE, corresponding to the target price of 14.80 yuan, the first coverage to give a "buy" rating.
Risk hint
Rare earth raw material price fluctuation risk; downstream demand growth is not as expected; RMB exchange rate fluctuation risk and so on.