Event: on August 2, 2022, the company released its semi-annual report 2022. In the first half of 2022, the company achieved revenue of 3.206 billion yuan, an increase of 99.8% over the same period last year, a net profit of 240 million yuan, an increase of 0.7% over the same period last year, and a net profit of 268 million yuan, an increase of 192.6% over the same period last year. 2022Q2, the company achieved revenue of 2.005 billion yuan, an increase of 116.3% over the same period last year, an increase of 66.9% compared with the same period last year; the net profit of returning to the mother was 166 million yuan, down 4.3% from the same period last year, up 125.2% from the previous year; and deducting the net profit of 176 million yuan from the same period of last year, an increase of 27.7% over the same period last year and 92.6% over the previous year.
The performance is in line with our expectations.
2022H1 revenue rose 99.8 per cent year-on-year, while net profit deducted from non-return increased by 192.6 per cent year-on-year. In terms of revenue split, the revenue of the new energy vehicle sector exceeded 600 million yuan, an increase of more than 2.5 times over the same period last year, accounting for more than 18.7% of the revenue, the fastest growing area; the company's traditional strength, consumer electronics, had revenue of more than 900 million yuan, an increase of more than 70% over the same period last year, and revenue accounted for more than 28%; revenue in industrial and other application areas was about 1.1 billion yuan, an increase of more than 50% over the same period last year, and revenue accounted for more than 34.3%. The increase in product prices reduced the gross profit margin by 5.17pct to 23.95% compared with the same period last year. From the perspective of product prices, because the price adjustment of NdFeB products lags behind the price of raw materials, while the price of 2022Q1 praseodymium neodymium oxide increased 98% year-on-year to 100.2 million yuan / ton, the price of 2022Q2 products may have a big increase. In terms of production and sales, the annual production capacity of 2022H1 NdFeB blank is expected to be 21000 tons by the end of 2022, an increase of 7000 tons over the end of 21. Thanks to the increase in production capacity, NdFeB sales may increase compared with the same period last year.
In addition, it is worth noting that due to the poor performance of the company's ocean electric stock 2022H1, the fair value change income decreased by 65 million yuan compared with the same period last year; due to the shock fall in the price of Q2 rare earths, the company set aside 29.49 million yuan more than at the beginning of the period for inventory price decline, resulting in an increase in asset impairment loss compared with the same period last year.
2022Q2, the company realized a net profit of 166 million yuan, compared with + 92.5 million yuan. The two factors with large changes are the increase of 215 million yuan in gross profit and 46.52 million yuan in fair value change.
The former benefits from the rise in the volume and price of NdFeB products, while the latter is due to a greater decline in the company's stake in Ocean Motor Q1 and a loss reduction in Q2 compared with the previous month. The impairment point mainly lies in impairment loss (- 66.59 million yuan), other / investment income (- 38.89 million yuan), fees and taxes (- 35.33 million yuan) and income tax (- 26.49 million yuan).
Focus on the main business of magnetic materials, fully benefit from the prosperity of NdFeB magnetic materials industry. The company's magnetic materials business focuses on consumer electronics, new energy vehicles, industrial automation and other high-margin subdivision direction, products and customers are relatively high-end. Through employee stock ownership and equity incentives and other measures to bind the core technology and managers to stimulate the vitality of the team.
Investment suggestion: the company currently has an annual production capacity of 15000 tons of NdFeB billets, while actively promoting Baotou's annual production capacity of 15000 tons, the rapid growth of production capacity is expected to fully benefit from the industry boom. Taking into account the investment losses of Dayang Electric and the preparation for inventory price decline caused by the periodic decline in rare earth prices, we slightly downgrade the company's profit forecast, and expect the company to achieve a return net profit of 5.54,7.46 and 957 million yuan in 2022-2024, with an EPS of 0.56,0.75 and 0.97 yuan respectively; corresponding to the August 2 closing price, the PE is 24,18 and 14 times, respectively, maintaining the "recommended" rating.
Risk tips: product prices have fallen sharply, rare earth prices have fallen sharply, and the progress of the project has failed to meet expectations.