Financial Services Association, March 29 (Reporter Wang Bin) Rare earth prices fluctuate, putting pressure on industry companies. This evening, Galaxy Magnet (300127.SZ) released its annual report. The company's revenue and net profit both declined in 2023. Its revenue fell to the level of 2021, and net profit was comparable to the level of 2018.

According to financial data, the company achieved revenue of 824 million yuan last year, a year-on-year decrease of 16.95%; net profit to mother was 161 million yuan, a decrease of 6.1% over the same period last year. Sorting through past financial reports, we can see that the last time Galaxy Magnet saw a sharp decline in revenue and net profit was in 2013.

The Financial Services Association reporter also noticed that Galaxy Magnets' decline in performance last year was mainly dragged down by the fourth quarter. In the first three quarters of 2023, the company's net profit still showed positive growth; however, in the fourth quarter of last year, the company's net profit to mother was only 14.9914 million yuan, down 46.92% year on year; revenue for the same period was 194 million yuan, down 23.07% year on year.

Regarding the reason for the decline in revenue, Galaxy Magnet explained that during the reporting period, due to falling raw material prices, the average sales price of the company's products fell year on year. Although sales volume increased, revenue decreased year on year; the year-on-year decline in net profit was mainly due to a decrease in net exchange earnings and a decrease in gross profit from sales revenue.

Affected by rare earth price fluctuations and increased competition in the industry, the inventory value of Galaxy Magnets increased dramatically in 2023, from 177 million yuan at the beginning of the year to 296 million yuan at the end of the year, an increase of more than 67%. According to the annual report disclosure, the company's inventory includes raw materials, products in stock, products in stock, etc.

It is worth mentioning that the net cash flow from Galaxy Magnet's operating activities in 2023 was only 25.152 million yuan, a decrease of about 191 million yuan, or 88.39%, compared with the net cash flow for the same period last year. The company attributed this mainly to the combined effects of a decrease in cash received from products sold in the current period and an increase in cash purchased and paid to employees.

Galaxy Magnets' main products include bonded NdFeB magnets, samarium cobalt magnets, and hot-pressed NdFeB magnets. Among them, bonded NdFeB magnets are mainly used in micromotors and sensors in high-end cars. Galaxy Magnets said that during the reporting period, although the sales revenue of the company's automotive magnets decreased compared to the same period last year due to falling product prices, the number of products was basically the same as the same period last year.

The company predicts that as automobiles develop towards comfort, energy efficiency, automation and intelligence, the number of bonded NdFeB magnets used in automobile motors will continue to increase. Furthermore, since bonded NdFeB magnets have the advantages of high efficiency and energy efficiency, the application demand for high-efficiency and energy-saving motors such as intelligent or automated control motors, energy-saving air conditioning motors, pump motors, power tools, energy-saving household appliances, and intelligent robots will increase.

Referring to the 2024 business plan, Galaxy Magnets said that the company will continue to develop new products of magnets, samarium cobalt magnets, hot-pressed magnets and injection-molded magnets for automotive motors and high-efficiency motors, and vigorously explore the markets for hot-pressed magnets, samarium cobalt magnets, and injection-molded magnets to ensure a steady increase in the market share of the company's products.

In terms of the project promotion plan, Galaxy Magnet proposed that it will actively promote the construction of the wholly-owned subsidiary “Chengdu Silver Magnetic Materials Co., Ltd.” project to further advance the construction of the second phase of the silver magnetic materials project. According to reports, by the end of 2023, the company had invested 300 million yuan.