Main points of investment:
Four major advantages to build core competitiveness. 1) Industrial chain advantages: the company sets up factories in Ganzhou and Baotou, the main rare earth producing areas, and establishes long-term and stable cooperative relations with China rare Earth Group, Northern rare Earth and other major rare earth suppliers to ensure a stable supply of rare earth raw materials. In addition, the company actively improves the layout of the industrial chain, through the acquisition of Yinhai new materials (proposed), the construction of Mexico waste magnetic steel recycling project to achieve the recycling of magnetic mud and waste magnetic steel. The company also abides by the industry ethics, does not hoard and does not pursue the income of raw material inventory. 2) technological advantages: master the industry-leading grain boundary penetration technology to develop a variety of high-grade products, per ton operating costs and per ton manufacturing costs are at a low level in the whole industry. 3) scale advantage: at present, the company has an annual production capacity of 23000 tons of high-performance NdFeB permanent magnet materials, with an additional production capacity of 12000 tons in Baotou Phase II and 3000 tons in Ningbo at the end of 23 years. It is estimated that a total blank production capacity of 40, 000 tons will be formed by 2025. 4) first-mover advantage in the market: the company's products have the characteristics of non-standardization, long certification cycle, high quality requirements and strong customer stickiness. The company has established long-term and stable cooperative relations with downstream core customers such as Tesla, Inc., BYD, Bosch, Xinjiang Goldwind Science & Technology, Midea, Gree and other core customers, with a global market share of 28% in the field of new energy vehicles in 22 years.
The field of new energy and energy conservation opens the space for the growth of high-end NdFeB demand. With the acceleration of the transformation of energy structure, new energy vehicles and wind power generation contribute to the main increment of high-performance NdFeB demand end, and the robot industry will continue to grow in the farther future. According to our estimates, the total global demand for high-performance NdFeB from 2023 to 2025 will be 12.4 gambit 14.0 / 161000 tons, and CAGR will be 17.0% in the next three years, of which the contribution increment of new energy vehicles will be 0.9amp 1.2 / 14000 tons.
The price of rare earths tends to be rational and profitability has been repaired. The company's profitability is highly related to the level of rare earth price fluctuations, according to our estimates, the actual balance of supply and demand of praseodymium-neodymium oxide from 2023 to 2025 is 0.39 Maxime 0.02-5200 tons REO, rare earth prices fluctuate downward in 2023, prices stabilize in 2024, and rise slightly again in 2025, but the overall volatility is weak compared with 2021 and 2022, so the company's profitability is expected to return to a healthy level. At the same time, the decline in the price of rare earth materials and small price fluctuations may increase the permeability and downstream application range of rare earth permanent magnet materials, leading to the growth of demand.
Profit forecast and investment advice: the company's net return profit from 2022 to 2025 is expected to be 7.79max 11.02 / 1.308 billion yuan, with a growth rate of 11%, 42% and 19%. Using the relative valuation method, considering the rapid development of the company in the field of magnetic materials for new energy vehicles, the company is given a "buy" rating of 24.5 times PE in 2024, corresponding to a market capitalization of 27 billion yuan and a target price of 20.10 yuan per share for the first time.
Risk tips: the company's projects under construction are not as expected; the risk of fluctuations in raw material prices; downstream demand is not as expected; industry competition aggravates the risk; customer expansion is not as expected.