On March 27, 2023, the company released its 2022 annual report. In 2022, the company achieved revenue of 6.319 billion yuan, an increase of 87.5% over the previous year; net profit of 404 million yuan, an increase of 52.5% over the previous year; net profit of non-return mother was 383 million yuan, an increase of 50.5% over the previous year. 2022Q4, the company achieved revenue of 1,762 million yuan, an increase of 81.8% over the previous year and a decrease of 2.3% over the previous month; the net profit of the mother was 99 million yuan, an increase of 21.5% over the previous year, an increase of 0.4% over the previous year; net profit of the non-return mother was 89 million yuan, an increase of 20.9% over the previous year and a decrease of 7.7% from the previous month. The performance is in line with the performance forecast.
The net profit of the mother in 2022 was the best in history, with a year-on-year increase of 139 million yuan. Mainly due to a year-on-year increase in gross profit of 250 million yuan, the increase in gross profit was mainly due to a sharp rise in the volume and price of magnetic products. ① Product structure:
The company has fully entered the supply chain of the world's mainstream car companies, accounting for 65% of the downstream automobile market (50% in the same period in 2021), with energy-saving and new energy vehicles accounting for close to 50% (30% in the same period in 2021). Among other sectors, consumer electronics market revenue increased 108% year over year, and home appliance market revenue increased 94% year over year. ② Volume: The company sold 9515 tons of high-performance NdFeB magnets in 2022, an increase of 48.58% over the previous year. The company's products are equipped with 3.49 million sets of energy-saving and new energy vehicle drive motors, an increase of 85% over the previous year. ③ Price: In 2022, the unit price of magnetic materials increased 28% year-on-year to 406,600 yuan/ton (assuming that the revenue of permanent magnet materials and components only contributed to permanent magnet materials), and the price of a single set of NdFeB magnets for new energy vehicles increased 44.8% year-on-year to 845 yuan/set. ④ Profit: Due to the year-on-year increase in the price of the raw material metal praseodymium, the company's magnetic material unit cost increased 35% year-on-year to 348,300 yuan/ton in 2022, and the unit gross profit decreased by 1,300 yuan year-on-year. The company's overall gross margin fell 5.19pct year-on-year to 14.39%. However, it is worth noting that the gross margin of 2022Q4 companies rebounded 3.5pct to 16% year on year
Shanghai Dajun is still losing money, hampering its performance. Revenue was 90.81 million yuan in 2022, an increase of 37% over the previous year, but due to factors such as increased market competition and the epidemic in the first half of the year, no profit was achieved. The net profit in 2022 was a loss of 61.6 million yuan. The performance and delivery speed of an electric controller product developed by Shanghai Dajun in collaboration with customers were recognized by customers. Annual sales reached 22,190 units, an increase of 813.17% over the previous year.
Core highlights: ① Production capacity continues to expand. At present, the company already has an annual production capacity of 24,000 tons of NdFeB stock, while the company plans to reach 36,000 tons of NdFeB stock by 2026 according to downstream demand. ② Excellent raw material guarantee ability. In 2022, the production capacity of the company's joint venture with Minmetals Rare Earth Group, a subsidiary of China Rare Earth Group, increased 200% to fully guarantee the company's supply of raw materials. ③ Excellent cash flow guarantee ability. Against the backdrop of a sharp expansion of production capacity that required more to cover the bottom line of working capital, the company maintained a net cash flow of 231 million yuan from operating activities. During the same period, some of its peers had already turned negative.
Investment advice: Considering that the company has high performance NdFeB projects under construction and that downstream demand for magnets is expected to recover, the company's production capacity will be gradually released and performance will continue to increase in the future. We expect to achieve net profit of 564/7.23/851 million yuan respectively in 2023/2024/2025, up 39.7%/28.1%/17.7% from the previous year. EPS is 0.69/0.88/1.04 yuan/share, respectively. PE corresponding to the closing price on March 29 was 18/14/12X respectively, maintaining the “recommended” rating.
Risk warning: the price of rare earths falls, the progress of project commissioning falls short of expectations, the risk of increased competition in the industry, etc.