Core views

The company focuses on the production of micro-nano metal powder materials, and has industry-leading carbonyl iron powder process core technology to achieve import substitution for foreign products such as BASF. It is also one of the few domestic manufacturers that also has carbonyl iron powder and atomized alloy powder processes. The main deep processing products include soft magnetic powder, MIM feed, wave absorbing materials, etc., and the downstream application scenarios are rich. With the rapid development of new energy, AI computing power, etc., the downstream market is rapidly expanding. The company originally raised 5,200 tons of carbonyl iron powder, and has raised 6,000 tons of production capacity. At the same time, it is planning to build a new Ningxia base with 100,000 tons of production capacity. It plans to achieve significant cost reduction through technological progress, raw material adjustment, and energy structure adjustment, etc., to open up market space for carbonyl iron powder and break through the company's growth ceiling.

occurrences

Net profit to mother increased 11.31% year-on-year in the first quarter

According to the report for the first quarter of 2024, the company achieved total operating income of 88,111 million yuan, up 11.31% year on year; net profit of 16.782,900 yuan, up 2.42% year on year; deducted non-net profit of 145.326 million yuan, up 0.87% year on year; net cash flow from operating activities was 7.1902 million yuan, or -6.4962 million yuan in the same period last year; during the reporting period, Yuean New Materials basically earned 0.2 yuan per share, with a weighted average return on net assets of 2.36%.

Brief review

Based on carbonyl iron powder and atomized alloy powder, soft magnetic powder, MIN feed, and wave absorbing materials are wings.

The company has formed a product layout with two basic powders, carbonyl iron powder and atomized alloy powder, extended by three deep-processing products: soft magnetic powder, MIM feed, and wave absorbing materials. It is widely used in the fields of 3C precision parts, electronic components, automotive parts, power tools, microwave absorption materials, 3D printing, etc., and the products directly or indirectly enter the supply chain of customers such as Delta Electronics, Samsung, Seiken Technology, Husqvarna, and Indo-MIM.

The leading domestic carbonyl iron powder company raised 6,000 tons of production capacity to be released steadily.

Iron carbonyl powder is a multifunctional ultrafine metal powder material. Due to the difficulty of the process and the high production cost, its large-scale application and promotion have been limited to a certain extent. Currently, it is mainly used in the field of high added value and high precision products. The number of domestic companies that can mass-produce carbonyl iron powder is limited, and the market concentration is high. The company has a market share of more than 50% in the domestic carbonyl iron-based soft magnetic powder market, achieving import substitution for foreign products such as BASF in Germany.

The company's 6,000-ton carbonyl iron powder project has been completed, and production capacity has gradually increased from 5,200 tons to 11,200 tons.

The powder market capacity is growing by leaps and bounds, the performance of carbonyl iron powder is outstanding, and the future prospects are broad.

The mainstream processes for iron-based metal powders in the world include reduction, atomization, electrolysis, and carbonyl. The corresponding average market price is about RMB 0.7, 1.2, 2.0, and 40,000 yuan/ton, with a total market capacity of about US$3.8 billion (2021) and US$5.1 billion (2025). Due to its high process cost and high price, the total market size of carbonyl iron powder is only about 200 million US dollars, accounting for only about 5%. In the future, with the rapid development of fields such as new energy, AI, and large computing power, consumption scenarios will continue to be enriched, and the powder market capacity will expand by leaps and bounds. Carbonyl iron powder has the three characteristics of fine particle size (particle size less than 10 microns), good sphericity, and high purity. If it is made into precision structural parts, it is relatively atomized (particle size about 30 microns) and reduced iron powder (particle size is about 70 microns) as raw materials, higher density and better mechanical performance; if components are manufactured, in medium and high frequency application scenarios such as servers, GPUs, automotive electronics and electricity, etc., compared to other high frequency application scenarios such as iron powder Raw materials are more energy efficient and easier to implement Miniaturization and integration.

Vision plans a 100,000 ton production capacity project in Ningxia, expand market space through cost reduction, and open up the company's growth ceiling.

Based on industry conditions, the company plans to reduce the cost of iron carbonyl powder and achieve rapid expansion of the consumer market in the future. The company plans to build a new 100,000 ton production capacity project at the Ningxia base. It plans to reduce costs through capacity expansion, technological progress, raw material adjustment, energy structure adjustment, etc., and plans to build a new 100,000 ton production capacity project at the Ningxia base. Under the premise of maintaining 40% gross margin, the price of basic carbonyl iron powder will be reduced from 40,000 yuan/ton to 20,000 yuan/ton, and undertake the market for iron-based powders produced by competitive processes such as electrolysis to meet the rapidly growing demand for high-performance iron powder in the electronics, electricity and other fields. Compared to achieving the consumer market for iron carbonyl powder Rapid expansion opens the company's growth ceiling.

Profit forecast and investment suggestions: The company is a leading domestic carbonyl iron powder. It has mastered the core process of carbonyl iron powder, and achieved cost reduction and market expansion through technological innovation, opening up the company's growth ceiling in the future. Over the next three years, the company's 6,000-ton fund-raising project will steadily release production capacity, and the first 3,000-ton demonstration line at the Ningxia base will be put into operation. It is estimated that in 2024-2026, the company's revenue will be 6.2/7.8/970 million yuan, achieving net profit of 1.3/1.7/220 million yuan, corresponding to PE of 22/17/13 times. The first coverage will be given a purchase rating.

Risk warning: 1. The scale of the company's production capacity has grown rapidly. The 6,000-ton production line has been built, and the production release pace is determined according to market consumption. If downstream consumption performance is weak, the capacity release rate of the fund-raising project may fall below expectations, affecting the company's performance; if the company's powder production and sales volume falls 5%/15%/25%, the corresponding company's revenue falls 2.6%/8.2%/12.8%, corresponding to a 2.5%/7.6%/12.6% reduction in net profit; 2. The 100,000 ton production capacity of the new Ningxia base will be put into operation in three phases. Completed in 2025, if the cost reduction of the demonstration production line falls short of expectations, it may affect the progress of the subsequent phase II and phase III capacity expansion and affect the company's long-term performance expectations; 3. The company's Ningxia 100,000 ton production capacity project is scheduled to be fully completed in 2029, which is a long time away, or there is a possibility that the planned project will change.