受稀土价格下跌计提存货减值影响公司业绩。2023 年上半年，氧化镝/氧化铽/氧化镨钕均价分别为205 万元/吨、1046 万元/吨、57.3 万元/吨，分别同比去年-23%/-26%/-40%。受稀土产品价格下跌影响，公司销售毛利减少且确认存货减值损失增加，上半年公司实现营业收入111.44 亿元，同比下降7.33%；归母净利润1.02 亿元，同比下降45.44%；其中富远公司上半年实现净利润-0.87亿元，同比下降218%，兴邦公司实现净利润0.21 亿元，同比下降67%，华企公司净利润0.69 亿元，同比增长21%。Matters:
The company released its semi-annual report for 2023. The company achieved operating income of 11.144 billion yuan, down 7.33% year on year; net profit of 102 million yuan, down 45.44% year on year; net profit after deducting net profit of 57 million yuan, down 70.39% year on year; of these, financial expenses were 026 million yuan, down 41.58% year on year, sales expenses of 0.1 million yuan, down 30.73% year on year; asset impairment losses - 126 million yuan, down 514.4% year on year; net operating cash flow was -482 million yuan, year-on-year change 52.5%
Commentary:
The company's performance was affected by falling rare earth prices and accounting for inventory impairment. In the first half of 2023, the average prices of dysprosium oxide/oxide/neodymium oxide were 2.05 million yuan/ton, 10.46 million yuan/ton, and 573,000 yuan/ton, respectively, -23%/-40% compared with last year. Affected by falling prices of rare earth products, the company's gross sales profit decreased and inventory impairment losses increased. In the first half of the year, the company achieved operating income of 11.144 billion yuan, a year-on-year decrease of 7.33%; net profit attributable to the mother was 102 million yuan, a year-on-year decrease of 45.44%; of these, Fuyuan Company achieved net profit of -188 million yuan in the first half of the year, a year-on-year decrease of 218%; Xingbang Company achieved net profit of 210 million yuan, a year-on-year decrease of 67%; and a year-on-year increase of 21%.
The decline in rare earth prices narrowed in the Q2 quarter, prices rose steadily in the Q3 quarter, and the industry trough may have passed. The average prices for the second quarter of 2023 were 1.95 million yuan/ton, 8.57 million yuan/ton, and 482,000 yuan/ton, respectively, -20%/-40%/-47% from the same period, and -10% /- 31%/-28%. Affected by changes in rare earth prices, the company achieved revenue of 4.945 billion yuan in the second quarter, a year-on-year decrease of 30.9%, and a decrease of 20.2% over the previous year; net profit for the second quarter was 96 million yuan, a year-on-year decrease of 8.75%, an increase of 1604%. Entering July and August, The price of praseodymium oxide has been rising steadily. Among them, the average price of the three rare earth products in July was +6%/-12%/-8%, respectively, and the average price in August was +9%/+2%/+7%, respectively.
Investment income from Dabaoshan Mining increased the company's performance. In the first half of 2023, the company's investment income in joint ventures and joint ventures was 80 million yuan, down 18% from the previous year. Among them, the second quarter was 49 million yuan, down 28.9% year on year, and an increase of 55.4% over the previous year. Among them, Dabaoshan Mining overcame the difficulty of the price of sulfur concentrate falling from 650 yuan/ton to 350 yuan/ton. By strengthening the comprehensive recycling of by-products, reducing costs and increasing efficiency, Dabaoshan Mining's total profit and net profit were exceeded. In the first half of the year, Dabaoshan Mining achieved total profit of 239 million yuan, net profit of 210 million yuan, and contributed 81 million yuan to the company.
The output of the company's rare earth mining enterprises has broken through a record high, and production is expected at full quota for the full year of '23. In 2022, the company obtained a production safety license issued by the Guangdong Provincial Emergency Management Bureau and completed the expansion and integration of rare earth mines. In '22, the company's annual output was 1,523 tons. In the first half of 2023, the output of the company's rare earth mining enterprises broke through a record high, and the company is expected to produce at full quota (2,700 ton quota) in '23.
Investment advice: Considering the decline in rare earth prices in the first half of the year, we adjusted the company's performance forecast for 2023-2025: the company is expected to achieve net profit of 3.0/5.0/690 million yuan (previous value of 4.9/79/970 million yuan), respectively, a year-on-year increase of 29.0%/66.9%/37.3%. Considering the company's historical valuation and comparable company valuations, we gave the company a valuation of 30 times in 2024, corresponding target price of 44.6 yuan, target price space of 29%, maintaining a “strong promotion” rating.
Risk warning: The price of rare earths fluctuates greatly; downstream demand falls short of expectations; the progress of project production expansion falls short of expectations.