Maintaining the “Overweight” rating, the target price is 19.78 yuan. Considering that the price of NdFeB fell 31%/24% in 23-24, downgraded the company's EPS to 0.42/0.67/0.92 yuan in 2023-2025 (originally 0.61/0.79/1.01), refer to comparable company valuations, consider that rare earth resource companies in comparable companies have a certain premium, giving the company 21 times PE in 25 years, maintaining the target price of 19.78 yuan.
Q4 Volume and price remained stable month-on-month, and performance fell slightly short of expectations due to cost side drag. The company initially calculated revenue of 6.69 billion yuan in 2023, -6.7% year-on-year, net profit of 564 million yuan, year-on-year, net profit of 490 million yuan, year-on-year -27.7%; of these, Q4 net profit to mother was 0.7 billion, +335% year-on-year, -57% month-on-month, and 60 million yuan net profit without return to mother, +371%, and -63% month-on-month.
① Production: The estimated Q4 company's magnetic material production is about 0.42 million tons, +27% year-on-month, -3% month-on-month, ② Price: Considering the quarterly delay, the average price of Q4 praseodymium is about 590,000 yuan/ton, -1% month-on-month. Judging from the scale of revenue, the sales price of Q4 magnetic materials is basically stable. ③ Expense side: However, due to factors such as accounting for employees' year-end bonuses, increased R&D investment, and increased expenses for the period before the Ningbo base was put into operation, Q4's operating costs+various expenses were about 1.56 billion yuan, +8% over the previous month (an increase of about 110 million yuan). Overall, the month-on-month decline in Q4 results was mainly dragged down by the cost side and fell slightly short of expectations.
Crystal boundary penetration technology is leading, and production capacity is released into the harvest period. In the first three quarters, the company's crystal boundary penetrated 9364 tons of products, accounting for 85%, leading the industry. The company's Baotou Phase II, Ganzhou and Ningbo projects will gradually be put into operation in 2024, and increased performance can still be expected.
Demand can be expected to pick up, and the company is the first to benefit as an industry leader. Electric vehicles and wind power are still expected to maintain a relatively rapid growth rate, and humanoid machines are also expected to gradually expand, which is expected to drive the company's performance to continue to grow.
Risk warning: Downstream demand falls short of expectations, and prices of rare earth raw materials fluctuate sharply.