Ploughing NdFeB for more than 20 years, it has become one of the leading industries in the world. The company has been ploughing NdFeB for more than 20 years and has grown into one of the leading enterprises in the global high-performance NdFeB industry with a production capacity of 16000 tons in three major bases. With the expansion of downstream demand, the company's production and marketing continued to expand, driving the company's revenue CAGR to 29.7% and net profit CAGR to 27.1% in 2017-2021, achieving rapid growth.
High-performance NdFeB ushered in continuous growth, the domestic leader is expected to maintain a leading edge. Under the global dual-carbon background, there are great opportunities in the field of new energy and energy-saving motors, and NdFeB is one of the core materials in related industries. It is estimated that the global demand for high-performance NdFeB may reach 221000 tons in 2025, and CAGR is about 22.6% in 2021-2025. The largest increment comes from new energy vehicles, and the demand for CAGR may reach 40% in 2021-2025. Wind power, air conditioners, energy-efficient motors, robots and other fields will also contribute more demand increments. While the supply-side structure is excellent, high-performance NdFeB production capacity is concentrated in domestic listed companies, overseas increment is limited in the future, domestic leaders will expand production in an orderly manner in line with customer demand, and Longtou market share is expected to remain stable or slightly increased.
The company's raw materials + technology + customer advantages are highlighted, stepping into a period of accelerated growth. 1) the supply of raw materials for long-term association + joint venture is adequate: the supply of rare earth raw materials may continue to be tight, while the proportion of company long-term association + joint venture protection can reach 70%. 2) the deep accumulation of technology helps to reduce costs and increase efficiency: the company has three core technologies, including Zhenghai anaerobic process, grain optimization and heavy rare earth diffusion, and the grain optimization product coverage of 22H1 has reached 85%; the heavy rare earth diffusion production capacity has reached 11000 tons, and the product coverage has exceeded 70%. 3) the customer base is of high quality and is expected to grow with the downstream: the 22H1 automotive sector accounts for about 60% of revenue, of which energy-efficient and new energy vehicles account for 40% of the total, and nine of the top 10 automakers in the world have achieved mass production or fixed-point production. Due to the rapid growth of the industry (about 40 per cent of CAGR) and a small proportion of costs (only 1 per cent), the magnets of new energy vehicles have a better volume environment, profitability and affordability. 4) capacity expansion and accelerated growth: 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.
Profit forecast and investment advice: the company's production capacity is steadily expanding, while profit per ton is expected to further increase due to economies of scale, while Shanghai Daxun is expected to turn losses into profits. We estimate that the company's net profit from 2022 to 2024 will be RMB4.43 million, with a year-on-year growth rate of 67.20%, 59.58%, 29.25%, corresponding to the current market capitalization PE of 25.34x, 15.88x, 12.29x, maintaining the "overweight" rating.
Risk hints: lower-than-expected demand risk, policy change risk, supply exceeding expected risk