Recently, Jinli permanent Magnet received an on-site visit and research. Jinli permanent Magnet said that the construction of Baotou's "High performance rare Earth permanent Magnet material Base Project" began in November 2020. at present, the project has been completed and accepted, and the installation and commissioning of the main equipment has been completed and will enter the production stage. It is expected to gradually reach full production in the second quarter of this year. After the project reaches production, The company will form a blank production capacity of 23000 tons / year of high-performance rare earth permanent magnet materials. In addition, Ningbo's "annual output of 3000 tons of high-end magnetic materials and 100 million sets of components" project has started construction, is expected to be completed and put into production in 2023. The company's long-term plan is to build a capacity of 40000 tons by 2025. The rapid expansion of the company's production capacity can lay a solid foundation for the development of the next two years.
The issuance of Hong Kong shares is progressing smoothly in accordance with the schedule. According to the H-share prospectus disclosed by the company, the amount of financing is expected to be about HK $4.24 billion to HK $5.06 billion (assuming the over-allotment option has not been exercised). The purpose of raising funds mainly includes: 1) about 35% for the construction of Ningbo production base; 2) about 25% for potential acquisitions to expand the layout of the industrial chain; 3) about 20% for R & D purposes; 4) about 10% for repayment of Baotou production base project construction loans; 5) about 10% for working capital and general corporate purposes.
The company's H-share offering has introduced heavyweight cornerstone investors, including the mixed ownership Reform Fund of China's state-owned enterprises, CRAlph aInvestmentIILimited and HHLRFund,L.P., which are indirectly owned and controlled by China Resources Group. And YHGInvestment,L.P., CITIC Prudential Life Insurance Co., Ltd., and China White Industry Investment Fund under China Merchants Capital.
The company is operating normally in the fourth quarter of 2021, the company's capacity utilization has been at a very high level, and the capacity has been fully utilized in the fourth quarter of 2021. In the 2021 performance forecast, the company takes into account the cost of issuing H shares and the pre-start-up costs of Baotou Company (early recruitment and training of a large number of employees). These fees play a positive role in the long-term development of the company, and are not expected to happen again after the listing of the company's H shares and after Baotou Company is officially put into production.
Competing for share with other companies in the new energy track, the company's core advantages include its huge production capacity, excellent research and development capabilities, proprietary technology and strong product delivery capability. to become a leading supplier of high-performance rare earth permanent magnet materials in the field of new energy and energy conservation and environmental protection. The core competitive advantages of the company are as follows:
1. The rapid growth of the world's leading manufacturer of high-performance rare earth permanent magnet materials;
2. Carry out in-depth cooperation with the leading enterprise customers in the new energy and energy-saving industry, so that the company can grasp the growing downstream demand;
3. It has the first-mover advantage in the rare earth permanent magnet industry, which has the characteristics of high customer viscosity and high barrier to entry.
4. Strong R & D capability of production optimization and global leading grain boundary penetration technology;
5. Long-term and stable strategic cooperation with major rare earth suppliers;
6. Experienced and loyal management team with visionary leadership and excellent executive ability.
In the first half of 2021, the company's revenue in the field of new energy vehicles and auto parts reached 317 million yuan, accounting for about 17.5% of the company's operating income in the same period (accounting for about 18% of the main business income). It increased by 149.63% over the same period last year. In the first half of 2021, the company's sales volume of new energy vehicle drive motor magnetic steel products can be assembled about 376000 new energy passenger vehicles. In the first three quarters of 2021, the company's revenue in the field of new energy vehicles and auto parts reached 659 million yuan, accounting for about 22.6% of the company's operating income in the same period (accounting for 23.9% of the main business income). It increased by 225.93% over the same period last year. In the first three quarters of 2021, the company's sales of new energy vehicle drive motor magnetic steel products can assemble about 800000 new energy passenger vehicles. It is estimated that about 1.24 million new energy passenger vehicles can be assembled in 2021.
Global sales of new energy passenger vehicles rose from about 458000 in 2015 to about 2.9441 million in 2020, a compound annual growth rate of about 45.1 per cent, according to Frost Sullivan. Global sales of new energy vehicles are expected to reach about 11.3 million in 2025, with a compound annual growth rate of about 30.9% from 2020 to 2025, which will continue to grow rapidly.
The field of new energy vehicles and auto parts has become one of the main growth points of the company, and the main customers in this field include Tesla, BYD, Lulai, ideal, SAIC, Volkswagen, General Motors and Bosch. Benefiting from the rapid growth of market demand for new energy vehicles, the share of revenue in the field of new energy vehicles and auto parts is expected to further increase.
In terms of the impact of large fan size on the unit and overall consumption of rare earth permanent magnet materials, Jinli permanent magnet said that making full use of the technical advantages of rare earth permanent magnets can help the large-scale development of fans, although the amount of rare earth permanent magnets per unit power may be reduced, but the total use of large-scale rare earth permanent magnets is expected to increase.
From 2015 to 2020, the global consumption of high-performance NdFeB permanent magnet materials for wind turbines increased from about 7170 tons to about 12880 tons, with a compound annual growth rate of about 12.4 percent, according to Fross Sullivan. It is expected that the global consumption of high-performance NdFeB permanent magnet materials for wind turbines will reach about 19620 tons in 2025, with a compound annual growth rate of about 8.8 percent.
In the field of wind power, four of the world's top six wind power manufacturers in 2020 are corporate customers, including Goldwind and Siemens-Gomeisa. In the first three quarters of 2021, the company's wind power revenue reached 714 million yuan, an increase of 10.83% over the same period last year. In the first three quarters of 2021, the company's sales of wind power magnetic steel products are about 6.51GW, and the installed capacity of assembling turbines is expected to be about 8.65GW for the whole year of 2021.
The establishment of China rare Earth Group in Ganzhou on December 23, 2021 is conducive to the sustained and healthy development of the rare earth industry and the optimal allocation of rare earth resources in the market.
While taking effective measures to ensure the long-term and stable supply of rare earth raw materials, the company can reduce the impact of price fluctuations of rare earth raw materials on the company's business performance by purchasing rare earth raw materials in advance according to on-hand orders, establishing safety inventory of rare earth raw materials, establishing price adjustment mechanism with customers, optimizing formula and process, and so on.
In addition, with regard to the impact of rising raw material costs on the company's profit margin, Jin Li permanent Magnet pointed out that it has a certain pressure on the company's cost, and the lag effect of price transmission to the downstream will have a certain impact on the gross profit margin. The company's specific measures to deal with fluctuations in rare earth raw materials include:
First, the production and sales mode of fixed production is mainly adopted, and rare earth raw materials are purchased in advance according to the order on hand, so as to reduce the impact of price fluctuation of rare earth raw materials on the company's performance.
Second, according to the H-share prospectus disclosed by the company: the contracts entered into between the company and most of its customers have a price adjustment mechanism. According to the price adjustment mechanism, the company can adjust the unit price of its products once in a certain period (monthly / quarterly / semi-annual / annual) according to the contract entered into with the customer. The adjusted price generally refers to the spot price of rare earth raw materials at the time of pricing. The company's price adjustment mechanism helps the company to transmit the price fluctuation of rare earth raw materials to customers to some extent. In the first half of 2021, revenue with a price adjustment mechanism accounted for 85.8% of the company's total revenue. According to the price adjustment mechanism agreed with customers, the company will adjust the prices of related products in January 2022 according to the prices of rare earth raw materials in the previous cycle.
Third, according to the price trend of upstream raw materials, purchase an appropriate amount of rare earth raw materials as safety inventory; fourth, increase investment in technological research and development, and adopt grain boundary infiltration technology with independent intellectual property rights through the optimization of product formulations, so that the proportion of heavy rare earths used in the same product decreases year by year, reducing production costs and improving competitiveness.
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