Event: the company released its 2022 semi-annual report. 2022H1, the company achieved revenue of 2.755 billion yuan, an increase of 88.3% over the same period last year, a net profit of 206 million yuan, an increase of 80.8%, and a non-return net profit of 197 million yuan, an increase of 77.4% over the same period last year. 2022Q2, the company achieved revenue of 1.69 billion yuan, an increase of 100.8% over the same period last year, an increase of 58.7% compared with the same period last year; the net profit returned to the mother was 123 million yuan, up 44.2% from the same period last year and 46.6% from the previous year; and the net profit from non-return was 120 million yuan, up 47.6% from the same period last year and 54.8% from the previous year. The performance is in line with expectations.
Both volume and price rose to a new high. 2022H1's net profit increased by 92.29 million yuan over the same period last year, mainly due to a 97.56 million yuan increase in gross profit compared with the same period last year. In terms of revenue split, 1.31 million sets of magnetic materials were delivered in the energy-efficient and new energy vehicle market, with sales revenue up 151% year-on-year; sales revenue in automotive electrification areas such as EPS increased 34% year-on-year; and sales revenue in the household appliance market increased 147% year-on-year. Price: the average price of 2022H1 praseodymium and neodymium metal reached 116.70 million yuan / ton, an increase of 84.01% over the same period last year and 39.71% month-on-month growth. The price of the company's products may also have a big increase. Quantity: the annual production capacity of 2022H1 NdFeB blank is expected to be 24000 tons by the end of 2022, an increase of 8000 tons over the end of 21. Thanks to the increase in production capacity, NdFeB sales may increase compared with the same period last year. It is worth noting that the company's sales revenue in the key layout of the automobile market has accounted for nearly 60%, especially in the energy-efficient and new energy vehicle market, the sales revenue has accounted for more than 40%, or will continue to benefit from the growth of downstream market demand for new energy vehicles.
2022H1 Shanghai County reduced its profit by 23.3 million yuan. Due to the impact of the closure and shutdown of epidemic prevention in Shanghai, the business income of the company's new energy vehicle motor drive system business decreased by 60.17% compared with the same period last year, and the net profit decreased by 5.69 million yuan compared with the same period last year. In the future, the company is expected to improve the operation of Shanghai County through capital, management support and strengthening cooperation with strategic partners, and it is expected to turn losses into profits by 2023.
Technology research and development continues to advance, ultra-light rare earth magnets open downstream multi-level demand. The company has three core technologies: Zhenghai anaerobic process (ZHOFP), grain optimization technology (TOPS) and heavy rare earth diffusion technology (THRED). Grain optimization technology (TOPS) related products cover 85% of the company's products; heavy rare earth diffusion technology (THRED) related products cover more than 70% of the company's products. As of 2022H1, the company's heavy rare earth diffusion technology (THRED) production capacity has exceeded 11000 tons. In addition, the multi-combination application of the three core technologies has given birth to the company's three major product lines of low-weight rare earth magnets, non-heavy rare earth magnets and ultra-light rare earth magnets, fully meeting the multi-level needs of the downstream market.
Investment suggestion: the expansion of production capacity is accelerated, and the company welcomes the period of rapid development. Conforming to the trend of new energy, energy saving and intelligence downstream, the company has a clear expansion strategy and expects to form a production capacity of 24000 tons of NdFeB blank by the end of 2022, and will continue to expand production, with a production capacity of 36000 tons by the end of 2026 according to market demand. We raise our profit forecast. It is estimated that the net profit of 2022, 2023, and 2024 will be 4.19, 5.17 / 621 million, 0.51 and 0.63, respectively, and the PE will be 33X/27X/22X.
Risk tips: the risk of rare earth raw material price fluctuations, project construction and production is not as expected, the risk of intensified competition in the industry, and so on.