Event: the company released its 2023 semi-annual report, with revenue of 4.304 billion yuan, year-on-year-8.50%, return-to-mother net profit of 163 million yuan, year-on-year-59.86%, deduction of non-return net profit of 152 million yuan,-61.69% compared with the same period last year, which is on the upper side of the previous performance forecast range. Among them, 2023Q2 achieved revenue of 2.089 billion yuan in a single quarter,-17.93% of the same period last year, and net profit of 62 million yuan and 74.27% of the same period last year, deducting 59 million yuan of non-return net profit and-74.93% of the same period last year.
The downward price of rare earths affects the company's performance release. 2023H1 achieved a gross profit margin of 14.82%, year-on-year-3.20pct, and a net profit margin of 5.43%, year-on-year-4.70pct. The main reasons for the decline in the company's performance are: 1) due to the influence of the macro environment, the demand for the company's products in some application areas is insufficient and the price has dropped, resulting in a decrease in the company's operating income; 2) the average prices of praseodymium-neodymium oxide, terbium oxide and dysprosium oxide in 2023H1 are-39.02%,-24.41% and-23.1% respectively compared with the same period last year. The impairment loss of the company's assets in the current period reached 69.02 million yuan, + 151.57% compared with the same period last year.
Short-term performance is under pressure, long-term still optimistic about the future development of the company. The company plans to use the raised funds and its own funds to expand the production capacity of 10,000 tons of sintered NdFeB. At present, 5000 tons of new production capacity has been built, and the rest of the expansion capacity will be gradually built according to the actual situation. Including the newly built production capacity mentioned above, the existing production capacity of sintered NdFeB is 25000 tons and that of bonded NdFeB is 1500 tons. The downstream of the company's industry includes traditional application fields such as automotive EPS, energy-saving household appliances, consumer electronics, industrial motors, as well as new energy vehicles, rail transit, robots and other emerging application fields. With the advent of low-carbon economy, there is a great potential demand for NdFeB permanent magnet materials in emerging fields. The company focuses on the production and R & D of NdFeB permanent magnet materials, with the gradual expansion of new production capacity, long-term performance is expected to continue to break through.
Investment suggestion: as the world's top NdFeB permanent magnet manufacturer, the company has outstanding R & D and innovation ability and continues to meet the needs of market development. The industry demand declined in the first half of the year. According to the actual operating situation of the company and the analysis of the future market trend, we downgraded the company's 2023-2025 net profit to 639, 0.59, 0.32 million yuan, EPS, 0.53, 0.62, 0.85, and 21.29, 17.93, 13.18 times, respectively, maintaining the "recommended" rating.
Risk tips: downstream market demand is lower than expected; raw material price fluctuation risk; exchange rate fluctuation risk and so on.