The company's 23H1 net profit was-93.77% compared with the same period last year, while the "buy" rating company 23H1 achieved revenue of 8.558 billion yuan (yoy-2.33%) and home net profit of 84 million yuan (yoy-93.77%). According to the company's 23H1 profit situation, we downgrade the per ton gross profit assumption of rare earth oxides and rare earth metals, and reduce the praseodymium oxide neodymium oxide, terbium oxide price and dysprosium oxide price since the beginning of 23. It is estimated that the company EPS 0.23 EPS 0.57 shock 0.70 yuan in 23-25 years (the previous value is 0.58 shock 0.87 pound 0.97 yuan). As the price of rare earths fluctuated greatly in 23 years, and the change of raw material price lagged behind the change of product price, we switched to 24-year valuation. Comparable company 2024PE average 24.6X, give the company 24.6X PE (2024E), corresponding to the target price of 14.14 yuan (the previous value of 17.14 yuan), maintain the "buy" rating.
The decline in gross profit margin superimposed asset impairment, and the performance of 23H1 was under pressure. 23H1 realized the production of rare earth oxides, metals and concentrates of 0.62, 0.82 and 1300 tons, which was 343.58% of the same period last year. Sales of rare earth oxides, metals and concentrates were 0.47max, 0.63 / 23400 tons, and 28.08%, respectively, compared with the same period last year. The company's rare earth products make a large contribution to gross profit, accounting for 90% of the total in 22 years. 23H1 rare earth prices are under pressure, the company's raw material price changes lag behind product price changes, gross profit margin fell 16.66pct to 6.17% year-on-year, and asset impairment loss of 173 million yuan. 23H1's performance was under pressure, and its net profit fell 93.77% to 84 million yuan compared with the same period last year.
Rare earth prices 23H1 fell mainly, showing the characteristics of stopping the decline and stabilizing in July, the domestic rare earth industry integration progressed smoothly, showing that light rare earths are mainly northern rare earths and medium and heavy rare earths are mainly Chinese rare earth groups. we believe that with the deepening of industry integration, the healthy development of the domestic rare earth industry will be effectively guaranteed. According to Wind,23H1 praseodymium and neodymium oxide, as the main variety of light rare earths, the price fell from an average price of 720000 / ton in January to a low of 452000 / ton in July; then the price stabilized and the average price in August was restored to 483000 / ton. At the same time, according to Shenghe Resources and Northern rare Earth 23 mid-year report, the 23Q2 performance of the two leading companies have fallen to small profits, or entered a strong cost support area. The listing price of praseodymium-neodymium oxide in the north is 470000 / ton, and the market price has risen to about 500,000 yuan / ton by the end of August, which may mean that the supply and demand pattern of the industry has improved.
Actively promote the Peak project and form a preliminary project planning
Peak obtained the mining license for the Ngula project in Tanzania at the end of April this year. According to the announcement of Peak, 2025Q2 is expected to complete the construction of the concentrator, produce Q3 and produce about 18000 tons of rare earth concentrate per year after reaching production. The company signed a memorandum with Peak in October 2022 to underwrite 75% of the Ngula project and discuss the possibility of acquiring part of the Ngula project. According to the announcement of Shenghe Resources on August 9, Peak updated the development schedule of the Ngualla project: either to complete the final investment decision and start construction by the end of May 2024, or to complete the construction and development of the Ngualla project by the beginning of 2026.
Risk tip: sharp fluctuations in raw material prices lead to impairment losses, downstream demand is lower than expected.