performance

The company released its three-quarter report for 2024. In the first three quarters of 2024, it achieved operating income of 5.014 billion yuan, -0.7% YoY; realized net profit to mother of 0.197 billion yuan, -60.2% YoY; and deducted non-net profit of 0.089 billion yuan, or -79.6% YoY. Among them, 24Q3 achieved revenue of 1.653 billion yuan in a single quarter, +1.99% year over month; realized net profit of 0.077 billion yuan, -52.24% year on year, +329.29% month on month; realized deducted non-net profit of 0.055 billion yuan, -63.25% year on year and +484.87% month on month.

The volume and price of the company's main products increased and decreased, and profitability was under pressure

In the first three quarters of 2024, the company relied on sufficient on-hand orders to actively increase its market share.

During the reporting period, the company's capacity utilization rate exceeded 90%, and the production and sales volume of high-performance magnetic products increased by about 40% year-on-year. The average market price of the company's core raw material praseodymium in the first three quarters of 2024 was 0.4752 million/ton, down about 28.69% from the average price of 0.6664 million yuan/ton in the same period in 2023. Lagging changes in raw material costs, compounded by factors such as increased industry competition, in the first three quarters of 2024, the company's gross margin was 10.03%, of which the gross margin for the third quarter was 12.81%.

Increase investment in R&D and actively lay out the humanoid robot market

In the third quarter of 2024, the company continued to invest in R&D, actively lay out the field of magnets and magnetic components for humanoid robots, accelerate the informatization and automation of production management, and reduce costs and increase efficiency. According to the company report, price lock orders signed by individual customers of the company when the prices of rare earth raw materials were relatively high have been partially executed, and the company's profitability has improved.

Investment advice

We expect the company's net profit from 2024-2026 to be 0.305/0.612/0.693 billion yuan, corresponding to PE78, 39, 34 times, and maintain a “buy” rating.

Risk warning

The company's new production capacity construction fell short of expectations; raw material prices fluctuated beyond expectations; industry competition intensified, and humanoid robot projects fell short of expectations.