Core views:
Due to the drop in rare earth prices, Q1's net profit was 200 million yuan. According to the company's first quarterly report, 24Q1 achieved operating income of 2,886 million yuan, a year-on-year decrease of 39.50%; realized net profit of 216 million yuan, a year-on-year decrease of 378.59% and a year-on-month decrease of 223.50%; realized net profit without return to mother of 220 million yuan, a year-on-year decrease of 531.70% and a decrease of 222.44% month-on-month; net cash flow from operating activities - 403 million yuan, a year-on-year decrease of 279.66%. By the end of the first quarter, the company's balance ratio was 37.4%, up 1.11 PCT from the beginning of the year. The company's performance declined month-on-month due to the decline in rare earth prices in Q1 and the accrual of depreciation losses of 181 million yuan.
Q1 The prices of praseodymium, neodymium, and terbium oxide fell month-on-month. According to Wind, the average price of praseodymium oxide in 24Q1 was 381,500 yuan/ton, down 42.5% year on year and 22.2% month on month; average price of terbium oxide was 5.64 million yuan/ton, down 54.1% year on year, down 29.0% month on month; average price of dysprosium oxide was 1.91 million yuan/ton, down 13.7% year on year and 27.5% month on month.
Q1 Production in the processing business increased year-on-year, and we expect the shareholding project to be put into operation as soon as possible. According to the company's quarterly report, 24Q1 rare earth oxide production was 4,599 tons, up 75.38% year on year, down 32.45% month on month, sales volume 2,560 tons, down 24.95% year on year, down 69.32% month on month; rare earth metal production was 5433 tons, up 35.40% year on year, up 3.24% month on month, and sales volume was 3,3338 tons, up 19.33% year on year and 25.05% month on month.
Profit forecasting and investment advice. The company's 24-26 EPS is expected to be 0.23/0.34/0.42 yuan/share, respectively, and the PE corresponding to the latest closing price is 46.2/30.4/24.7 times, respectively. After the rare earth industry chain experienced the removal of stocks in Q1, prices stabilized. The market is expected to rise and fall easily in the future. Considering that overseas rare earth mines in which the company's shares are expected to be put into operation, investment income is expected to give the company a 24-year PB valuation of 2.5 times. We believe that it is reasonable to give the company a reasonable value of 13.61 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.