据年报，24 年公司磁材成品产/销量分别为10636.85 吨/10088.44 吨，yoy-6.97%/-10.91%。受稀土原材料价格下跌、部分下游应用领域需求不足、市场竞争加剧等因素影响，公司产品价格同比下降、毛利收窄。24 年公司磁材产品销售营收同比下降20.74%，降幅明显；同期综合毛利率下降至10.69%，yoy-2.02pct。此外，因24 年稀土价格下跌，公司计提资产减值损失1.4 亿元，亦影响业绩表现。Zhongke Sanhuan released its annual report. In 2024, it achieved revenue of 6.751 billion yuan (yoy -19.23%), net profit of 12.0078 million yuan (yoy -95.64%), deducting non-net profit of -17.2653 million yuan (yoy -107.88%).
Among them, Q4 achieved revenue of 1.769 billion yuan (yoy -8.86%, qoq +4.52%) and net profit to mother of 54.0608 million yuan (yoy +4.33%, qoq +78.51%). The company's performance fell short of our expectations, mainly due to volume and price drops exceeding expectations and asset impairment. Considering that the 25-year rare earth magnetic materials industry chain is expected to pick up, the “buy” rating is maintained.
Volume and price have plummeted, and asset impairment has an impact on performance
According to the annual report, the company's production and sales volume of finished magnetic products in '24 was 10,636.85 tons/100,88.44 tons, respectively, and YOY -6.97%/-10.91%, respectively. Affected by factors such as falling prices of rare earth raw materials, insufficient demand in some downstream application areas, and increased market competition, the company's product prices fell year-on-year and gross profit narrowed. The company's sales revenue for magnetic products fell 20.74% year on year in '24, a significant decline; the comprehensive gross margin fell to 10.69% during the same period, yoy-2.02pct. In addition, due to the fall in rare earth prices in '24, the company accrued asset impairment losses of 0.14 billion yuan, which also affected performance.
The rare earth industry may reach an inflection point in 25 years, and the rare earth magnetic materials industry chain is expected to pick up. By the end of 24, the company has a sintered NdFeB production capacity of 0.025 million tons and a bonded NdFeB production capacity of 1,500 tons.
The company's ongoing projects are currently suspended. If the market recovers significantly in the later stages, the company has the ability to expand production capacity relatively quickly. According to Huatai Metals' “Rare Earths: 25 Years of Industry or Boom Inflection Point” (2025.03.11), the decline in domestic quota growth is compounded by disturbances in overseas supply. The trend of shrinking global rare earth supply-side growth is already showing, and emerging fields represented by humanoid robots are gradually opening up room for future growth in rare earths demand. We assume that Myanmar's supply declined in '25 but that domestic quotas continued to grow at a low rate in '26. We estimate that the global supply and demand balance/demand for praseodymium oxide was -5.8%/-4.6% respectively in 25-26; the probability of supply and demand improved, and the industry may reach an inflection point in 25, and the recovery of the rare earth magnetic materials industry chain is expected to drive the company's performance recovery.
Profit forecasting and valuation
Based on the 24-year production and sales data and gross profit performance, we lowered our 25-26 production forecast and profitability assumptions. The company's 2025-2027 EPS is expected to be 0.19, 0.33, and 0.49 yuan respectively (previous values of 2025-2026 were 0.23 and 0.39 yuan, respectively, a decrease of 17.39% and 15.38%). Comparable to the 25-year Wind, the average PB was expected to be 2.68 times, giving the company 2.68 times PB in 25, the BPS was 5.49 yuan, and the target price was 14.72 yuan (the previous value was 12.92 yuan, corresponding to 2.24 times the 2025 PB. The increase in target price was mainly based on a marked increase in comparable valuation levels) to maintain the purchase rating.
Risk warning: The macroeconomy falls short of expectations, downstream demand falls short of expectations, and changes in industry policies.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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