Several rare earth enterprises reported positive Q1 results, with rare earth permanent magnets concept performing brilliantly. Shenghe Resources hit the daily limit up. 【SMM News】

SMM May 6 Report:

The significant rise in rare earth spot prices in Q1 drove positive earnings reports for several rare earth companies, including China Northern Rare Earth and China Rare Earth, in the first quarter. The rare earth permanent magnets concept sector performed exceptionally well after the Labour Day holiday. As of 10:53 on May 6, the rare earth permanent magnets concept sector rose by 4.45%. Among individual stocks, Jingyuntong, Shenghe Resources, and Tianhe Magnetic Materials hit the daily limit, Jiuling Technology surged nearly 25%, while Xici Technology, Earth Panda, and others rose over 10%. Guangsheng Nonferrous Metals, Longmag Technology, and Galaxy Magnets were among the top gainers.

Market News

【Grinm Advanced Materials: Q1 net profit surged 14,698% YoY】Grinm Advanced Materials announced that in Q1, it achieved revenue of 1.84 billion yuan, down 18.67% YoY. Net profit attributable to shareholders of listed companies was 67.3847 million yuan, up 14,698.12% YoY. The main reason was the increase in net profit of its subsidiary Grinm Yijin and its holding subsidiary Grinm Rare Earth.

【China Northern Rare Earth: Q1 net profit surged 727% YoY, driven by higher sales volumes and prices of major rare earth products】China Northern Rare Earth announced that in Q1, it achieved revenue of 9.287 billion yuan, up 61.19% YoY. Net profit attributable to shareholders of listed companies was 431 million yuan, up 727.3% YoY. The main reasons were the year-on-year increase in the average selling price of the company's major rare earth products and the increase in gross profit. Meanwhile, the net cash flow generated from operating activities was 410 million yuan, up 371.14% YoY. Additionally, the production and sales volumes of rare earth oxides, rare earth salts, rare earth metals, magnetic materials, and other products increased in Q1.

【China Rare Earth: Prices of some products in the rare earth market rebounded, turning Q1 net profit around YoY】China Rare Earth disclosed its 2025 Q1 report on April 28, showing that the company achieved total operating revenue of 728 million yuan, up 141.32% YoY. Net profit attributable to shareholders of the listed company was 72.6181 million yuan, turning around from a loss YoY. Net profit excluding extraordinary items was 66.224 million yuan, also turning around from a loss YoY. The net cash flow generated from operating activities was -119 million yuan, compared to -504 million yuan in the same period last year. During the reporting period, the company's basic earnings per share were 0.0684 yuan, and the weighted average return on net assets was 1.55%. Regarding the increase in operating revenue, China Rare Earth stated that it was mainly due to the rebound in prices of some products in the rare earth market, prompting the company to adjust its sales strategy, thereby increasing operating revenue.

Pr-Nd oxide prices rose significantly in Q1

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On May 6, the first trading day after the Labour Day holiday, prices of some rare earth products, including Pr-Nd oxide, rose slightly.

The increase in prices of rare earth products such as Pr-Nd oxide in Q1 improved the operating performance of many rare earth companies.

Reviewing the price trend of SMM Pr-Nd oxide in Q1, it can be seen that the average price of Pr-Nd oxide on March 31 was 444,500 yuan/mt, up 46,500 yuan/mt from the average price of 398,000 yuan/mt on December 31, 2024, representing a Q1 increase of 11.68%. Comparing the daily average price of Pr-Nd oxide in Q1 2025 (429,605.26 yuan/mt) with that in Q1 2024 (381,646.55 yuan/mt), it can be seen that the daily average price in Q1 2025 rose 12.57% YoY.

Looking at the price performance of rare earth carbonate in Q1, the average price on March 31 was 35,950 yuan/mt, up 3,340 yuan/mt from the average price of 32,250 yuan/mt on December 31, 2024, representing a 10.36% increase. The daily average price of rare earth carbonate in Q1 2025 was 34,792.98 yuan/mt, up 3,825.04 yuan/mt from the daily average price of 30,967.24 yuan/mt in Q1 2024, representing a 12.35% YoY increase.

Market Sentiment

【China Northern Rare Earth: Total imports of ore significantly reduced this year, further improving the supply-demand relationship】On April 25, Qu Yedong, General Manager of China Northern Rare Earth, stated at the 2024 Annual Performance and Cash Dividend Briefing that, "In 2025, the total imports of ore will be significantly reduced. Meanwhile, under the stimulus of a series of national consumption policies, consumption orders in key downstream sectors will continue to be released, further improving the supply-demand relationship. This is expected to have a positive impact on the company's product sales and prices." (Financial News Agency)

China Securities stated that in 2024, China imported 133,000 mt of rare earths, including 77,300 mt of rare earth metal compounds, mainly from Myanmar, Laos, and Malaysia, and 55,600 mt of rare earth metal ore, almost entirely from the US. Baichuan calculated that the actual conversion of Pr-Nd oxide was approximately 4,500 mt. On the supply side, it is expected that US rare earth concentrate exports to China will stall in 2025, and there is a possibility of tightening rare earth supply in Southeast Asia. Domestically, China is strengthening dual controls on rare earth production and exports. On the demand side, 2025 is the first year of significant demand growth for humanoid robots. The rare earth sector offers both offensive and defensive characteristics, and it is recommended to maintain close attention.

TF Securities believes that due to the scarcity of medium-heavy rare earths and their high-end applications, export controls will further solidify China's position in the rare earth industry chain. Currently, it is a time of resonance between the fundamentals and sentiment of the rare earth sector, with the price center of rare earths rising, while equity values have not fully reflected this. Investment opportunities in the sector should be emphasized.