Event: on July 8, 2022, the company issued an announcement on the pre-increase of its performance for the first half of 2022. 2022H1, the company expects to achieve a net profit of 12.8% to 1.42 billion yuan, an increase of 136% to 162% over the same period last year, and to deduct a non-return net profit of 12.63% to 1.403 billion yuan, an increase of 168% over the same period last year. In the Q2 quarter alone, the company expects to achieve a net profit of RMB 5.67-707 million, an increase of 144%-205% over the same period last year, a decrease of 20.4%-0.7%, and a net profit of RMB 5.57-697 million, an increase of 149%-211% over the same period last year and a decrease of 21.2%-1.3% compared with the previous year.
The performance exceeded wind's consensus expectations.
The price of rare earth products has increased greatly compared with the same period last year, and the performance is brilliant. From the perspective of product prices, benefiting from the rapid development of new energy vehicles, energy-saving motors, wind power and other fields, the market demand for major rare earth products is improving as a whole, and product prices have increased greatly. The average price of 2022Q2, praseodymium and neodymium oxide is 910,000 yuan / ton, and the average price of neodymium oxide is 2570 yuan / kg, which is + 77.4% and-0.5% respectively compared with the same period last year. The rise in praseodymium and neodymium product prices is the core driving force of year-on-year profit growth. In terms of volume, the current oxide and metal capacity expansion is mostly concentrated in the second half of production, so the first half of the increment may be limited, Q2 production and sales are expected to be the same as the same period last year.
Rare earth products prices month-on-month pullback, superimposed inventory earnings weakened, Q2 performance slightly decreased. In terms of product prices, the quarterly average price of Q2 praseodymium-neodymium oxide / dysprosium oxide decreased by 9.2% and 14.5% from the previous quarter, and from the price trend, the decline in rare earth prices from the beginning of March to the middle of April led to a decline in inventory earnings compared with Q1.
In terms of volume, the production of new capacity is mostly concentrated in the second half of the year, and Q2 production and sales are expected to be flat.
The company has the layout of rare earth resources at home and abroad and adheres to the diversified raw material supply strategy. ① domestic company managed the continental trough rare earth mine, participated in Mianli rare earth, Shandong Steel Research China Aluminum rare Earth Technology Co., Ltd., to ensure the basic supply of domestic rare earths. Worldwide, ② successfully renewed its underwriting agreement with MP of the United States at the beginning of 2022 and expanded its cooperation to other products except rare earth concentrates. In addition, the company also participated in Australia's Greenland Company, Peak rare Earth Company, and became the latter's largest shareholder. ③ Company has also carried out active expansion in the field of seaside placer, actively preparing raw materials for the expansion of seaside placer mineral processing energy in advance.
Multi-projects go hand in hand, and performance is guaranteed in 2022-2024. The construction work of Lianyungang zirconium-titanium mineral processing project has been started in an all-round way, equipment installation is under way, and it is planned to be put into trial operation in the second half of 2022, when the production capacity of solitary stone will be increased to about 30,000 tons / year. Chenguang rare earth "annual output of 12000 tons of rare earth metals and alloys intelligent technical renovation project" has completed the main project of the workshop, and the automatic electrolytic furnace has been successfully trial run. The 6000 ton rare earth metal technology upgrading project of Coburi has completed the acceptance of the electrolysis workshop, and the steel structure workshop of the auxiliary workshop and mixing workshop is being installed. It is expected that the conditions for commissioning and trial operation will be available in the second half of 2022.
Investment suggestion: the company carries on the global distribution of rare earth resources and grasps the sources of rare earth ores in multiple channels. although the growth of indicators is rare, because overseas imports of rare earth ores do not occupy indicators, the company has obvious advantages in overseas resources. and it's growing year by year. We maintain the company's 2022-2024 net profit of 27.68,30.48 and 3.299 billion yuan, with EPS of 1.58,1.74 and 1.88 yuan respectively, and maintain a "recommended" rating of 14,12 and 12 times the PE corresponding to the closing price on July 8.
Risk tips: downstream demand is lower than expected, indicators are growing too fast, overseas mining projects are progressing faster than expected, and so on.