Net profit fell 6.66% year on year in '23, maintaining that the buy-rating company achieved operating income of 6.688 billion yuan, yoy -6.66%; net profit of Gimu was 564 million yuan, yoy -19.78%. The slowdown in the growth rate of downstream demand for new energy, etc., and the rapid decline in rare earth prices had a big impact on the company's performance. Looking ahead to the future market, the promotion of policies such as automobile price cuts and “trade-in”, combined with the accelerated implementation of long-term humanoid robots, we are optimistic that demand for high-end NdFeB will maintain a high growth rate in 24-26. Based on this, we estimate that the company's net profit for 24-26 will be 730/11.80/1,449 million yuan, respectively (the previous value of the previous value of 11.44/1.05 billion yuan for 24-25 years), and the corresponding 24-year EPS would be 0.54 yuan. Comparable to the 24-year Wind, the company unanimously anticipated PE23.26X. Considering that the company added 15,000 tons of NdFeB production capacity will be put into operation and released in 24, as the industry leader, the company's average A/H premium rate for the past three months was 143.0%. Based on the HKD/RMB exchange rate of 0.923 on March 28, 2024, the corresponding target price for A/H was 17.28 yuan/7.71 yuan (previous values were 19.72/9.14 yuan, respectively), maintaining the “buy” rating.
The company's magnetic material sales increased 25.6% year on year, and the company's gross margin declined month-on-month in 23Q4. According to the annual report, the company's sales volume of finished magnetic products reached 151,000 tons in '23, yoy +25.6%. In terms of profit, the company's gross sales margin for the full year of '23 was 16.07%, yoy-0.52 pct. Among them, the gross margin for 23Q4 was 14.48%, down 3.95pct from month to month. Mainly due to increased market competition in the fourth quarter of last year, the price of NdFeB fell too fast. In terms of R&D, the company continued to increase R&D investment in magnetic materials, magnetic components and robot automation. The company's R&D expenses for the full year of '23 were 354 million yuan, an increase of 4.86% over the previous year, and the R&D rate reached 5.29%.
The company's production capacity reached 38,000 tons in 24 years, and the NEV sector's revenue share rose to 49.39%. According to the annual report, the company currently has a high-performance NdFeB production capacity of 23,000 tons. As Baotou's 12,000 tons/year high-performance magnetic materials project and Ningbo's 3,000 tons/year high-end magnetic material and 100 million component production capacity project are nearing completion and commissioning, the company's cumulative NdFeB production capacity will reach 38,000 tons in 24 years. In terms of product structure, the company's demand in the NEV sector continues to rise. According to the annual report, the company's revenue in the NEV sector for the full year of 2023 was 3.303 billion yuan, yoy +14.33%, accounting for 49.39% of the company's total revenue, YOY+1.90pct. In addition, the company is also actively developing products and production capacity in fields such as humanoid robots. According to the company's announcement, Mexico's 1 million sets/unit magnetic module project will mainly be used to produce products related to humanoid robots and other fields.
Emerging sectors drive high growth in demand for NdFeB. The industry's supply and demand shortage pattern or continuation of high-performance NdFeB permanent magnet materials are driven by various fields such as new energy vehicles, wind power, and energy-saving elevators. The demand side is growing rapidly, and supply and demand are facing a large gap. We expect global demand for high-performance NdFeB to reach 166,800 tons in 2025. With active supply-side production expansion, the supply-demand gap ratio is likely to increase to -22.1%. At the same time, humanoid robots have accelerated their landing speed, and demand for servo motors may become a new growth pole for high-performance NdFeB. The long-term high-performance NdFeB industry is likely to continue the pattern of high demand growth.
Risk warning: Downstream demand in the industry fell short of expectations, and upstream production expansion exceeded expectations.