The company announced its 2024 interim report. In the first half of the year, it achieved operating income of 17.162 billion yuan, -8.37% year over year; realized net profit of 1.017 billion yuan, +28.47% year over year; realized net profit deducted from non-mother of 0.858 billion yuan, +18.93% year over year.

The focus on tungsten prices moved upward in the first half of the year, and the company's tungsten business progressed steadily. Looking at a single quarter, the company achieved revenue of 8.892 billion yuan in Q2, -12.55%, and +7.52% month-on-month; realized net profit of 0.59 billion yuan, +68.09% year-on-year, and +38.17% month-on-month; realized net profit of 0.557 billion yuan without return to mother, +69.30% year-on-year and +85.05% month-on-month. In terms of profitability, the company's gross margin for the first half of 2024 was 19.02%, up 2.12 percentage points year on year; net margin was 9.34%, up 2.65 percentage points year on year. In the first half of the year, the company's tungsten mine saw a year-on-year increase in revenue and a sharp year-on-year increase in profit due to rising tungsten concentrate prices. By increasing the export share of midstream tungsten smelting products, profits have increased dramatically.

The company's downstream cutting tool products in the 3C market have achieved good growth in key customer projects in the 3C market. At the same time, production of tungsten wire for photovoltaics rapidly expanded, and production, sales and profits increased dramatically year-on-year, driving the overall improvement of the company's tungsten business. Currently, the Xiamen Honglu 100 billion photovoltaic tungsten wire project is undergoing construction of supporting infrastructure projects and equipment investment and construction, and all tasks are progressing in an orderly manner according to the plan.

Magnetic products are being expanded at an accelerated pace, and profitability is gradually improving. From January to June 2024, the company's rare earth business achieved revenue of 2.054 billion yuan, a year-on-year decrease of 21.48%; the total realized profit was 0.117 billion yuan, a year-on-year decrease of 23.50%. The decline in the rare earth business was mainly due to the integration of part of the company's rare earth business with the China Rare Earth Group, and the former holding subsidiary Longyan Rare Earth Company and the former Jinlong rare earth smelting and separation business were no longer included in the scope of the consolidated statement. The profit and revenue attributable to this part of the business declined sharply over the same period last year. At the same time, due to the decline in the price of rare earth raw materials and increased competition in the industry in the first half of the year, the profit of the company's rare earth deep processing products declined year-on-year. In terms of magnetic materials, the company's magnetic material products stabilized the share of key customers in the wind power sector by increasing the NEV market and overseas customer expansion. In the first half of the year, sales increased 13% year on year, and profitability improved quarter by quarter.

Product sales in the new energy materials business continued to grow, and the company's leading position was consolidated. From January to June 2024, the company's new energy materials business achieved operating income of 6.3 billion yuan, a year-on-year decrease of 22.43%; total profit was 0.246 billion yuan, a year-on-year decrease of 10.06%. With the gradual recovery of the 3C industry in the first half of the year, the sales volume of the company's lithium cobalate products reached 0.0184 million tons, up 29.98% year on year, further increasing its market share and stabilizing its leading position; the company's ternary material products achieved sales volume of 0.0263 million tons in the first half of the year, an increase of 108.59% year on year, and the industry ranking was greatly improved; hydrogen storage alloy sales were 1,860 tons, up 7.53% year on year, continuing to maintain the leading position in the industry. However, due to falling raw material and product prices and increased market competition, the profit margin of squeezed products led to a year-on-year decline in the overall revenue and profit of the new energy materials business.

Investment advice: The price of tungsten continues to be at a relatively high level, laying the foundation for the company's performance. As the company's production capacity and market space for photovoltaic tungsten wire accelerates, future profitability is expected to continue to increase. The company's earnings per share for 2024-2025 are expected to be 1.41 yuan and 1.83 yuan, respectively. PE corresponding to the closing price on August 23 is 11.59 and 8.89 times, respectively, maintaining the company's purchase rating.