Main points of investment
The performance is in line with expectations, mainly benefiting from the rise in volume and price of NdFeB magnetic steel products. According to the semi-annual report for 2022, the company achieved 3.206 billion yuan in revenue in the first half of the year, an increase of 99.82 percent over the same period last year, 240 million yuan in net profit, up 0.67 percent over the same period last year, and 268 million yuan in non-return net profit, up 44.57 percent over the same period last year. In 2022 Q2, 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% over the same period last year, a net profit of 166 million yuan from the same period last year, a decrease of 4.3% over the same period last year, an increase of 125.2% over the previous year, and a net profit of 176 million yuan from a non-home company, an increase of 27.7% over the same period last year and 92.6% over the previous year.
Revenue growth is the fastest in the field of new energy vehicles. 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 percent of the revenue. The revenue of the consumer electronics sector exceeded 900 million yuan, an increase of nearly 70 percent over the same period last year, accounting for more than 28 percent of the revenue. The revenue of industrial and other application areas is about 1.1 billion yuan, an increase of more than 50 percent over the same period last year, accounting for more than 34.3 percent of revenue.
We will promote production capacity construction and improve productivity in an orderly manner. Baotou Yunsheng Science and Technology Development Co., Ltd. has an annual output of 15000 tons of high-performance rare earth permanent magnet materials intelligent manufacturing project started smoothly; grain boundary diffusion capacity is released rapidly. By the first half of 2022, the company has a grain boundary diffusion capacity of 6000 tons / year. It is estimated that by the end of the third quarter, grain boundary diffusion capacity will reach 10000 tons / year. It is estimated that the blank production capacity of the company will reach 34000 tons by 25 years.
Raise funds through the non-public offering of A-shares to build the intelligent manufacturing project of Baotou Yunsheng with an annual output of 15000 tons of high-performance rare earth permanent magnet materials. The total amount of funds raised in this non-public offering is 1.065 billion yuan (including capital). After deducting the issuance expenses, the net raised funds are intended to be invested in the intelligent manufacturing project of rare earth permanent magnet materials. The target of the issue is no more than 35 specific objects, including Yunsheng Technology, among which Yunsheng Technology intends to subscribe for 35% of the actual number of non-public offering shares in cash.
The demand end of NdFeB downstream is developing rapidly, which drives the demand of NdFeB to rise continuously. Take the new energy vehicle sector as an example, according to the data of the China Association of Automobile Manufacturers, the national production and sales of new energy vehicles in the first half of 2022 were 266.1 million and 2.6 million respectively, which is the fastest growing terminal field. In addition, the company makes use of the advantages of experience in the new energy automobile motor market to further strengthen the development of the traditional automobile market. Especially in the Korean market, the company has occupied a major share in EPS, automotive air-conditioning compressors and IDB systems. With the growth of demand, the company's production capacity is expected to be released gradually.
Profit forecast and valuation
Benefiting from the rapid development of the demand side, the rare earth permanent magnet industry is expected to maintain a high bearing, the company actively promotes production expansion projects, and the capacity is expected to be released gradually.
The company is expected to achieve operating income of 7.112 billion yuan, 10.626 billion yuan and 11.407 billion yuan in 2024, an increase of 89.45%, 49.41% and 7.35% respectively over the same period last year. The net profit returned to the home is 726 million yuan, 1.17 billion yuan and 1.324 billion yuan respectively, and the year-on-year growth in 2022 is 40.25%, 61.01% and 13.12% respectively, corresponding to EPS of 0.73,1.18 and 1.34 yuan respectively.
Corresponding to 2022-2024E PE is 19.54 12.14 PE 10.73 times, considering the level of the same industry, we give the company 20 times PE, corresponding to the target price of 23.60 yuan in the next 12 months.
Cover for the first time and give a "recommended" rating.
Risk hint
The price fluctuation of rare earth products is higher than expected; the construction of production expansion project is lower than expected; and the downstream demand is lower than expected.