Magnetic material Merchants for the Development of permanent Magnet + soft Magnetic two-wheel Drive

The company is a leading manufacturer of permanent magnet ferrite wet-pressed magnetic tiles in China, with the second largest production capacity and the top five in the world. Based on permanent magnet ferrite products, the company will further expand its soft magnetic business and will focus on permanent magnet and motor components, soft magnetic and new energy devices to achieve two-wheel drive development.

In 2021, the company achieved operating income of 805 million yuan, an increase of 43.91% over the same period last year, a net profit of 131 million yuan, an increase of 92.05% over the same period last year, and excellent profitability, with gross profit margin and net profit margin reaching 35.35% and 16.28%, respectively.

Permanent magnet business lays the foundation for the development of the company, and broadens the downstream automobile market. The company has excellent performance of permanent magnet ferrite wet magnetic tiles, which is the main business of the company, accounting for 78.41% of revenue and 38.61% of gross profit. At present, it is widely used in automobile, home appliances and other fields, accounting for 70% in the automobile field. Permanent magnet product certification cycle is long, customer barriers are high, the company has established long-term and stable cooperative relations with well-known manufacturers such as Bosch in Germany and Valeo in France. In the future, benefiting from the strong market such as downstream automobile motor, the company accelerates the pace of capacity expansion. It is estimated that by the end of 22, the production capacity of permanent magnet ferrite will reach 40,000 tons, and the 24-year production capacity will reach 60,000 tons.

Integrated layout of soft magnetic industry chain to optimize the overall product structure

Relying on decades of accumulation of permanent magnet raw material preparation technology, the company creates "magnetic powder-powder core-device".

The integrated soft magnetic industry chain forms the unique advantage of soft magnetic powder preparation. In terms of soft magnetism, the company has formed a production capacity of 4000 tons of metal powder cores and a planned production capacity of 6000 tons for ferrite soft magnetic projects. Soft magnetic ultimate target sales form for inductors, mainly used in photovoltaic and energy storage, new energy vehicles and charging piles, consumer electronics and other fields, is expected to achieve a production capacity of 360 million in 22 years.

Investment suggestion

We estimate that the company's return net profit from 2022 to 2024 will be 1.52,2.13 and 266 million yuan, corresponding to a price-to-earnings ratio of 20,15 and 12 times, giving the company a buy rating for the first time.

Risk hint

Upstream raw material price increase risk, production expansion less than expected risk, downstream demand lower than expected risk.