1H22 performance is in line with our expectations
The company announced 1H22 results: operating income was 3.206 billion yuan, up 99.8% over the same period last year; net profit was 240 million yuan, up 0.7% from the same period last year; and 268 million yuan was deducted from non-net profit, up 44.57% from the same period last year.
The operating income of 2Q22 Company was 2.005 billion yuan, up 116.3% from the same period last year, up 66.9% from the previous year; the net profit from the home was 166 million yuan, down 4.3% from the same period last year, up 125.2% from the previous year; and deducting 176 million yuan from the non-net profit, an increase of 27.7% over the same period last year and 93.4% from the previous year. 1H22's performance is in line with our expectations.
Seize the opportunity of new energy vehicle business development, 1H22 new energy vehicle sector revenue increased 2.5 times year-on-year. The company continues to dig deep into the three major areas of new energy vehicles, consumer electronics and industrial and other applications, and seize the opportunity to accelerate expansion in the field of new energy vehicles, achieving 1H22 revenue growth of 250%, 70% and 50% year-on-year, accounting for 19%, 28% and 34%, respectively.
2Q22 benefited from the rise in the volume of magnetic materials, and the company's performance improved month-on-month. On the one hand, the price of rare earth raw materials fell 2Q month-on-month. Take NdFeB 50H as an example, the average selling price of 2Q22 magnetic materials is 448,000 yuan / ton, up 51.2% from the same period last year, slightly down 0.3% from the previous year; the average cost of raw materials increased by 70.9% from the same period last year, down 9.2% from the previous year; and the profit per ton was down 16.6% from the same period last year, a sharp increase of 222.7%. Month-on-month profit improvement makes the company's 2Q22 gross profit margin 1.5ppt higher than the previous month. On the other hand, the rapid growth of downstream demand in the field of new energy and energy conservation has led to a continuous increase in the production and sales of NdFeB magnetic steel products, and the company's capacity utilization rate is at a high level.
Trend of development
By raising funds to build a 15000-ton high-performance rare earth permanent magnet manufacturing project in Baotou, and actively promoting capacity expansion and grain boundary infiltration capacity, the total capacity CAGR is expected to reach 60% in 2021-2023. First, according to the announcement, the company has formed an annual production capacity of 15000 tons of NdFeB blanks. The company expects to achieve an annual production capacity of 21000 tons of billets by the end of 2022, adding 15000 tons of production capacity to fund-raising projects. By the end of 2023, it is expected to achieve an annual production capacity of 36000 tons of magnetic billets, and the production capacity CAGR will reach 60% in 2021-2023. Second, the company continues to promote the research and development of grain boundary diffusion technology with the development road of "leading technology and pursuing originality". The grain boundary diffusion capacity has reached 6000 tons / year, and the company expects to form 10000 tons / year by the end of the third quarter of this year.
Profit forecast and valuation
The current share price corresponds to the price-to-earnings ratio of 19.3 times / 15.5 times earnings for 22LAX 23 years. It maintains a neutral rating and a target price of 14.19 yuan, corresponding to a price-to-earnings ratio of 20.2 times / 16.2 times earnings in 23, which is 5.0% higher than the current share price.
Risk
Capacity release is less than expected, downstream demand is lower than expected, and raw material prices fluctuate.