Event: Zhenghai Magnetic released its 2022 semi-annual report. The company's net profit in the first half of the year was 206 million, + 80.8% compared with the same period last year, and 197 million after deducting non-net profit, and + 77.4% compared with the same period last year.
Driven by the high boom of downstream new energy vehicles, the performance of magnetic materials has increased under the expansion of production and marketing and the improvement of profits per ton.
1) the field of new energy vehicles is the core driving force of the company's NdFeB performance growth: 22H1's NdFeB business revenue is + 92.1% year-on-year, and net profit is + 74.5% year-on-year. According to downstream application areas, revenue in the field of new energy vehicles is + 151% year-on-year, and household appliances is + 147% year-on-year + 147% EPS and other automobile electrification areas. At present, the company's revenue in the field of new energy vehicles has accounted for more than 40%, ranking in the forefront of the industry. 2) the simultaneous rise in volume and price brings high elasticity of NdFeB performance: on the one hand, due to the strong downstream demand and the gradual release of the company's production capacity, the production / sales of NdFeB has expanded, and the 2022H1 has reached 7156max, 7180 tons respectively. On the other hand, although the increase in the price of rare earths has driven up costs, the company's NdFeB products have also achieved a smooth price increase, with the average price per ton of NdFeB rising from 268000 in 2021 to 380000 in 22H1 and gross margin per ton from 49500 to 54000. 3) the epidemic situation is a drag on the performance of the motor drive system, which is expected to be improved in the future. The subsidiary Shanghai Daxun 2022H1 lost 23.3 million yuan,-32% compared with the same period last year, mainly due to the epidemic and other factors (the production and sales of the new mass-produced motor controller stagnated in March-June). As the epidemic recedes and the company increases support, it is expected to reverse the loss situation in Shanghai Daxun in the future.
Capacity homeopathic expansion, raw materials + technology + customer advantages are highlighted. 1) capacity continued to expand: the company's current production capacity is 16000 tons, which may expand to 24000 tons by the end of 2022, and is expected to expand to 36000 tons by 2026. 2) adequate guarantee of raw materials: the company has signed a long-term association with northern rare earths and Minmetals rare earths (the two purchases account for about 40% of 50%). At the same time, Jianghua Zhenghai Minmetals has been established as a joint venture with Minmetals rare earths, which can supply 6000 tons of NdFeB alloy sheet raw materials in the future. 3) profound technology accumulation: the company has three core technologies, such as Zhenghai oxygen-free process, grain optimization and heavy rare earth diffusion, which help to reduce costs and improve efficiency. The coverage of 22H1 grain optimization products has reached 85%; the coverage of heavy rare earth diffusion products has exceeded 70%. 4) High quality customers and abundant orders: at present, nine of the company's top ten automobile manufacturers in the field of new energy vehicles in the world have achieved mass production or fixed-point production, and there are more than 160 designated automobile projects. the total demand for the company's NdFeB blank in the future is more than 90,000 tons.
Profit forecast and investment advice: the estimated net profit of 2022, 2023, and 2024 is 4.4, 6.7, 900, 000.
Risk hints: lower-than-expected demand risk, policy change risk, supply exceeding expected risk