Event: on October 27, the company released the third-quarter report that the operating income in the first three quarters was 7.51 billion yuan, an increase of 52.9% over the same period last year, and the net profit was 616 million yuan, an increase of 200% over the same period last year. The net profit was 611 million yuan, an increase of 237% over the same period last year. In the third quarter alone, the operating income was 2.8 billion yuan, an increase of 32.4% / 10.1% over the previous quarter, a net profit of 211 million yuan, an increase of 134% / a decrease of 11.7%, a deduction of 215 million yuan of non-return net profit, an increase of 144% / a decrease of 9.1%.
The level of production and sales in the third quarter is basically stable, and the rebound in rare earth prices in the fourth quarter is expected to boost demand. 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: affected by the opening of the second batch of rare earth quotas and macroeconomic cooling, the average price of praseodymium and neodymium metal in the third quarter was 890000 / ton, down 20% from the previous quarter, 3.02 million / ton from the previous quarter, 11% from the previous month, and 17.07 million / ton from the previous month. It is expected that the prices of some products will fall with the correction of raw material prices. Entering the fourth quarter, new energy vehicles and other demand season performance is good, superimposed resources in the second half of the year rare earth concentrate cost support, rare earth prices stabilized and rebounded.
The gross profit margin in the third quarter is in the forefront of the industry, highlighting the leading ability of high-quality cost management. In the first three quarters, the gross profit margin was 18.0%, an increase of 1.9pct over 21 years, and a net profit margin of 9.9% and 3.2 pct over 21 years. In a single quarter, Q3 gross profit margin was 18.1%, a month-on-month decrease of 0.4pct, a net profit margin of 9.4%, a month-on-month decrease of 1.7pct, and a gross profit margin level in the forefront of the industry.
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 98.91,29.1 billion yuan, respectively, with a net profit of 8.5611.90 pounds per share, EPS 1.24 yuan per share, and the corresponding PE 1.24 yuan per share, respectively, to maintain 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.