Core views:
Q4 Net profit to mother increased 135% month-on-month. According to the annual report, the company achieved revenue of 17.877 billion yuan, up 6.68% year on year; realized net profit of 333 million yuan, down 79.12% year on year; net cash flow from operating activities was 391 million yuan, down 23.46% year on year; by the end of the year, the company's balance ratio was 36.3%, up 0.76 PCT from the beginning of the year. Benefiting from rising rare earth prices, Q4 achieved revenue of 4.770 billion yuan, up 22.98% year on year and 4.86% month on month; realized net profit of 175 million yuan, up 61.23% year on year and 135.21% month on month.
Q4 The prices of praseodymium, neodymium, and terbium oxide increased month-on-month. According to Wind, the average price of praseodymium oxide in '23 was 529,200 yuan/ton, down 35.8% year on year; average price of terbium oxide was 9.1 million yuan/ton, down 33.6% year on year; and average price of dysprosium oxide was 2.33 million yuan/ton, down 7.4% year on year. Q4 The average price of praseodymium oxide was 494,400 yuan/ton, down 27.0% year on year and 1.0% month on month; average price of terbium oxide was 7.94 million yuan/ton, down 40.5% year on year and 2.4% month on month; average price of dysprosium oxide was 2.63 million yuan/ton, up 11.4% year on year and 8.7% month on month.
Production and sales of the rare earth processing business are growing steadily, and we expect the shareholding project to be put into operation as soon as possible. According to the annual report, the company produced 19,149 tons of rare earth oxides in '23, up 56% year on year, sales volume was 17,875 tons, up 64% year on year; rare earth metal production was 17,657 tons, up 43% year on year, and sales volume was 14,770 tons, up 55% year on year. Q4 rare earth oxide production was 6808 tons, up 194% year on year, up 10% month on month, sales volume was 8346 tons, up 158% year on year, up 72% month on month; rare earth metal production was 5262 tons, up 24% year on year, up 27% month on month, and sales volume was 4,453 tons, up 53% year on year and 10% month on month.
Profit forecasting and investment advice. The company's EPS for 24-26 is expected to be 0.28/0.39/0.47 yuan/share, respectively, and the PE corresponding to the latest closing price is 36.1/26.3/21.5 times, respectively. Rare earth prices tend to rise and fall easily. Considering that overseas rare earth mines in which the company's shares are expected to be put into operation, the investment income is expected to give the company resource stock attributes. We think it is reasonable to give the company a 23-year PB valuation of 2.5 times. The corresponding company's reasonable value is 13.74 yuan/share, maintaining the company's “buy” rating.
Risk warning. Risk of supply exceeding expectations and demand falling short of expectations; risk of overseas project operation.