This report is read as follows:
The company raised the trading price of rare earth concentrate to 39189 yuan / ton (dry volume, REO=50%) in the second half of the year. The price of this transaction is 12302 yuan / ton or 45.75% higher than the previous one, and the profit of the company's rare earth sector may be greatly increased.
Main points of investment:
Maintain the "overweight" rating. Taking into account the increase in the price of rare earth concentrate, the company's EPS forecast for 2022-2024 is 0.13max 0.14max 0.16 yuan (formerly 0.11max 0.12max 0.13 yuan). Maintain the company's target price of 3.02 yuan and maintain the "overweight" rating.
The price of rare earth concentrate has been raised, which shows the value of the company's resources. The company announced that from July 1, 2022, the company will re-sign the rare Earth concentrate Trading contract with Northern rare Earth, raising the trading price of rare earth concentrate to 39189 yuan / ton (dry volume, REO=50%), and the total trading volume of rare earth concentrate between the two sides will still be no more than 230000 tons (dry volume, REO=50%) in 2022. The price of rare earth concentrate rose 12301.8 yuan / ton, or 45.75%, compared with the trading price carried out in the first half of 22 years. The demand for rare earths in the first half of 2022 is good, especially since the second quarter, the price of rare earths has fluctuated higher, and the company has followed the market to adjust the prices of rare earth concentrates. We have observed that the pace of adjustment of the trading price of the company's rare earth concentrate has accelerated significantly since 2021, and we believe that the value of the company's rare earth resources will gradually become apparent.
The rare earth industry maintains a high demeanor. The lower reaches of rare earths are mainly permanent magnetic materials and catalysts, accounting for 29% and 20% respectively. Since 2021, the permeability of new energy vehicles in China has increased rapidly, which has led to the improvement of global permeability of new energy vehicles, and the demand for permanent magnet materials has ushered in a rapid growth. At the same time, "carbon neutralization"
Under the background, after the parity of wind power, the increase in the installed capacity of wind power also supports the demand for permanent magnet materials. We believe that the rare earth industry will remain high in 22 years.
The steel sector need not be overly pessimistic. In the first half of 2022, the steel industry was affected by stronger raw material prices and weaker demand caused by the epidemic, and its profits were weak. In the second half of the year, with the "steady growth" force, we expect steel demand will gradually warm up, the company's steel sector profits will gradually pick up.
Risk tip: sales of new energy vehicles have fallen sharply, and real estate investment has fallen sharply.