Key elements of the report:
Guangsheng, which specializes in rare earths and tungsten, is a large state-owned listed company integrating investment, mining, smelting, application, scientific research, trade and warehousing of non-ferrous metals. The company has huge rare earth resources and tungsten resources. At present, there is a strong demand for new energy vehicles, aerospace and 5G mobile phones, driving the growth of demand for downstream products such as rare earth hydrogen storage materials, permanent magnet materials, heat-resistant coatings, cemented carbide and so on. The company's rich resources are expected to add more help to the company's future development.
Main points of investment:
The demand for new energy vehicles is not reduced, and the demand for permanent magnet and hydrogen storage materials is strong: with the continuous implementation of environmental protection policy, the comprehensive promotion of new energy vehicles is imperative. According to the plan for the production and sales of new energy vehicles in 2020 in the 13th five-year Plan, it is estimated that the relevant rare earth demand is 7000 tons of NdFeB, 1960 tons of praseodymium and neodymium, 106tons of terbium and 210tons of dysprosium, exceeding Guangsheng's non-ferrous related output. The strong demand has increased the consumption heat of the company's permanent magnet and hydrogen storage materials.
Deep space exploration is imperative, and heat-resistant materials and tungsten products can be expected in the future: according to the relevant plans of the National Space Administration, the Chang'e-5 lunar exploration satellite is expected to be launched in 20 years, and the Mars probe will be launched for the first time in 20 years. Mars orbiting and landing patrol exploration is also planned to carry out many deep space exploration missions such as asteroid and Jupiter exploration in 30 years. A series of major aerospace projects are bound to boost the demand for high-end materials such as rare earth heat-resistant materials and rocket tungsten nozzles.
The replacement trend of 5G mobile phones is accelerating, and mobile phone replacement is driving the growth of demand for cemented carbide: recently, the IDC report shows that the replacement rate of users in the Chinese market has increased significantly with the decline in the price of 5G mobile phones. At present, domestic shipments of 5G smartphones have reached 23.8 million units, and the average unit price is also rapidly falling, falling to less than $600 (excluding the tax benchmark) in the first quarter of 2020. According to the Ministry of Industry and Information Technology, by the end of March, 198000 5G base stations have been built across the country, and the era of 5G mobile phones has arrived in an all-round way, and the related cemented carbide materials will also usher in a new round of consumer demand growth.
Profit forecast and investment advice: the company's return net profit in 20-22 is expected to be 0.50,0.53 and 58 million yuan respectively, and EPS is 0.16,0.18 and 0.19 yuan respectively. Due to the company's huge rare earth resources and tungsten resources, as well as the expected demand growth of downstream products such as rare earth permanent magnet materials and cemented carbide, the company is given a "overweight" rating for the first time.
Risk factors: macroeconomic fluctuations, changes in national industry policies, lower-than-expected demand.
