The company issued an announcement of pre-increase in performance for the first half of 2022: it is expected that the net profit of returning to the mother in the first half of the year is 12.80 to 1.42 billion yuan, an increase of 135.76% and 161.55% over the same period last year, and that the net profit of non-return is deducted from 12.63 to 1.403 billion yuan, an increase of 137.90% and 164.27%. 22Q2 is expected to achieve a net profit of RMB 5.67-707 million in a single quarter, an increase of 144.40%-204.74% over the same period last year, and a deduction of RMB 5.57-697 million, an increase of 148.66%-211.16% over the same period last year.
The company's profit in the second quarter was slightly lower than that in the first quarter, we believe that the main reasons are: 1) the average price of praseodymium-neodymium oxide in the second quarter of this year was slightly higher than that in the first quarter; 2) the average price of praseodymium-neodymium oxide in the first quarter of this year was significantly higher than that in the fourth quarter of last year, so there is a part of the revenue brought by the inventory premium in the first quarter, and this part of the influence factor is weakened in the second quarter. The average domestic price of 2021Q4/2022Q1/Q2 praseodymium and neodymium oxide is 100.55 / 90.97,000 yuan per ton. The average price increased by about 30% in the first quarter of this year compared with the previous quarter, while the average price decreased by about 10% in the second quarter.
On the whole, we think that the company's profit in the second quarter still maintained a very high level, especially under the influence of the epidemic in the second quarter, the price of rare earths was adjusted, but the epidemic did not have much impact on the company's production and operation. it is mainly because the company's product sales are mainly based on large customers and long orders, and there are plenty of orders on hand.
The company's entire industrial chain layout, and each link still has a strong potential for expansion of rare earth mineral resources, the company currently holds rare earth resources of about 50,000 tons of REO/ years. Among them, the company is entrusted to manage the rare earth mine in Dechang Continental trough, Liangshan Prefecture, Sichuan Province, which is the second largest light rare earth mining area in China, with an annual output of about 10,000 tons of rare earth concentrate REO; shares in Mount pass, USA, and an annual output of 40,000 tons of REO, all of which are contracted and shipped to China by Shenghe.
Rare earth smelting separation, the company currently has about 15000 tons of REO rare earth smelting separation capacity. Sichuan base Leshan Sheng and about 8000 tons, Jiangxi base Chengguang rare earths about 7000 tons. The company is currently promoting the construction of a new rare earth smelting separation production base in Lianyungang City, Jiangsu Province. The Lianyungang rare earth separation project will increase the production capacity of at least 5000 tons of REO.
In terms of rare earth metals, the company currently has a rare earth metal processing capacity of about 12,000 tons per year. The production capacity of Chenguang rare earths in Jiangxi base is about 8000 tons, that of Sichuan base is about 3000 tons, and that of Vietnam base is about 1000 tons. The company's two domestic production bases are undergoing intelligent transformation, which are expected to be put into trial operation this year, and the total production capacity of rare earth metal processing will be increased to more than 20,000 tons in the future.
In terms of zirconium and titanium separation, the company currently has a processing capacity of 500,000 tons / year of seaside placer, which can produce about 10,000 tons of monazite per year. In addition, the company is currently promoting the construction of a new mineral processing base in Lianyungang City, Jiangsu Province, with an additional annual processing of 1.5 million tons of zirconium and titanium beneficiation project. the project is currently undergoing equipment installation and is scheduled to be put into trial operation in the second half of 2022.
Risk hint: rare earth prices rose less than expected; the company's production expansion plan was lower than expected.
Investment advice: raise your earnings forecast and maintain your "buy" rating.
The profit forecast for 2022-2024 shows that the revenue for 2022-2024 will be 213.96 million yuan, with a year-on-year growth rate of 101.5%, 16.3%, 16.2%, 24.78, 26.62, 2.88 billion yuan, and 130.3%, 7.4%, 8.2%, respectively, and the diluted EPS is 1.41, 1.52 and 1.64 yuan, and the current stock price corresponds to 1514Compact 13X. Considering that the company is the mainstream rare earth enterprise in China, the overseas market layout is expected to further open the room for future growth, and at present, the domestic rare earth industry is undergoing a very important demand change. The company's operating results are expected to fully benefit from the steady rise in the rare earth price center and maintain the "buy" rating.