Core views:
The price of raw materials fell sharply, and the company's net profit to mother fell 19.8% year on year in '23. According to Jinli Permanent Magnet's 23rd annual report, the company's revenue in '23 fell 6.7% year on year to 6.69 billion yuan, and net profit to mother decreased 19.8% year on year to 550 million yuan. Net profit attributable to mother increased 335% year-on-year to $70 million in 23Q4. Domestic revenue decreased 14.3% year on year to 5.44 billion yuan in '23, and overseas revenue increased 52.6% year on year to 1.25 billion yuan. Revenue from the NEV and auto parts sector increased 14.3% year-on-year to $3.3 billion in '23. The average price of the raw metal neodymium praseodymium fell 35.64% year on year in '23.
High-performance magnetic materials were released as scheduled, and production continued to expand for 24-25 years. According to the company's 23 annual report, the company currently has an annual production capacity of 23,000 tons of rough materials, and the production of magnetic materials in '23 was 15,154 tons, an increase of 18.5% over the previous year. Among them, 13,226 tons of high-performance magnetic materials were produced using grain boundary penetration technology, an increase of 32.7% over the previous year. Looking forward to the future, the Baotou Phase II 12,000 tons/year production capacity project, Ningbo's 3,000 tons/year high-end magnetic materials and 100 million components project are expected to be gradually put into operation in 24 years, and the Ganzhou 2000 ton high-efficiency and energy-efficient motor magnetic material project is expected to be put into operation in 25 years, and the rough production capacity is planned to reach 40,000 tons by 25 years.
Looking forward to the expansion of the humanoid robot market. According to the company's 23 annual report, the global humanoid robot market's demand for rare earth permanent magnets is estimated to be about 162% CAGR in 23-28, which is expected to increase to 2,888 tons. The company actively cooperates with the customer to develop magnetic components for humanoid robots, and plans to build a “project with an annual output of 1 million units/set of magnetic components” in Mexico to help enhance the competitiveness of humanoid robots and new energy vehicles in the market.
Profit forecast and investment advice: The company's 24-26 EPS is expected to be 0.52/0.66/0.82 yuan/share, corresponding to the closing price on March 28, '24, and the 24-26 PE is 30/23/19 times. Based on the company's historical valuation and comparable company valuation, the company's 24-year PE valuation was maintained at 34 times, corresponding to a reasonable value of 17.74 yuan/share. Referring to the current AH premium ratio, the reasonable value of H shares was 9.52 HKD/share, giving the company a “buy” rating for A/H shares.
Risk warning. The construction of the company's new production capacity fell short of expectations. The price of raw materials fluctuated more than expected. Market demand growth fell short of expectations.