Event: on October 18, 2022, the company issued a forecast for the third quarter of 2022. In the first three quarters, the net profit of returning to the mother was 5.8-650 million yuan, with a median increase of 199% over the same period last year, deducting the non-return net profit of 5.65-635 million yuan, with a median increase of 231% over the same period last year. In the third quarter alone, the net profit was 1.75-245 million yuan, with a median increase of 133% / 12% compared with the previous quarter, and a median of 133% / less 13% compared with the same period.
The output in the third quarter was basically flat, and the slight decline in performance was mainly due to the increase in exchange gains from the devaluation of the RMB in the second quarter. 1) quantity: the company has a blank production capacity of 20,000 tons. According to the capacity utilization rate of 85%, it is estimated that the blank output in the third quarter is 4300 tons, the yield is assumed to be 65%, and the corresponding output of the finished product is about 2800 tons, which is basically the same as the quarterly output. 2) Price: in the third quarter, the average price of praseodymium and neodymium metal was 890000 / ton, the month-on-month drop of 20%, the metal price of 3.02 million / ton, the month-on-month drop of 11%, the average metal terbium price of 17.07 million / ton, and the month-on-month drop of 5%. It is expected that the prices of some products will fall with the correction of raw material prices.
It is optimistic that the company's leading EV customers will have the advantage of issuing cards first, and the prosperity of new energy vehicles will be improved in the second half of the year.
The demand for new energy vehicles is gradually repaired in the second half of the year. According to the China Automobile Association, the month-on-month growth rate of new energy vehicle production from July to September is + 4.5%, 12.0%, 9.3%, respectively, and the demand boom is marginal. September sales were 708000, up 98.1% from the same period last year and 6.3% from the previous month. The fourth quarter will usher in the delivery of new cars by a large number of car companies, and it is expected that the production and sales of domestic new energy vehicles will continue to increase, and the short-term demand for middle and low-end products in the industry will decline under the influence of macroeconomic. I am optimistic about the growth opportunities in the segment of high-end magnetic materials. There will be more new production capacity in 2022-23, but the pressure can be controlled as a whole.
At the end of the year, the new production capacity will contribute to the future performance support and match the customer order demand. The company has an existing blank production capacity of 20,000 tons, and plans to increase the sintered NdFeB production capacity by the end of 2022 or the beginning of 2023, with a total production capacity of 30,000 tons. Before 2024, it is planned to expand production by 21000 tons, with a total production capacity of 51000 tons. Through the card position leading customer quality supply chain, the new production capacity matches the customer order demand, and the performance growth is expected to lead the peers.
Investment suggestion: the company continues to plough high-performance NdFeB magnets, and the new production capacity is about to enter the volume phase. it is estimated that the company's revenue in 2022-2024 will be 96.2pm 129.1pm 16.68 billion yuan respectively, with a net profit of 8.39pm 11508 million yuan, EPS 0.690.98pm 1.24 yuan per share, and the corresponding PE 20.8pm 14.7pm 11.6 times, maintaining the company's "buy" rating.
Risk hints: rare earth raw material price rise risk; downstream demand lower than expected risk; technology route major change risk; capacity landing risk not up to expectations.
