DMEGC: Copper Sheet Inductors Have Been Mass-Supplied to Renowned Domestic and Overseas Clients, Continuously Consolidating Its Leading Position in Ferrite Permanent Magnets and Soft Magnets

DMEGC's March 19 announcement of the information from the online investor exchange meeting shows: 1. What is the medium and long-term development plan for the company's magnetic materials and devices segment?
DMEGC responded: In 2024, the company's magnetic materials and devices segment achieved revenue of about 4.6 billion yuan, with 232,000 mt of magnetic materials shipped, up 17% YoY. Continuously consolidating the leading position in ferrite permanent magnets and soft magnets is the company's foundation. This segment is positioned to "horizontally layout a multi-material system and vertically extend into device development" to promote its steady growth over the medium and long term. Among them, the main market for ferrite permanent magnets is in home appliances and the automotive industry, with the primary task being to further increase market share; on the basis of consolidating the advantages in ferrite soft magnets, efforts will be increased in the development of metal powder cores, nanocrystalline materials, and devices, expanding applications in NEVs, PV, AI, and other fields, making it an important growth driver for the magnetic materials segment; plastic magnets, while maintaining their small leadership position in thermal management systems, steering systems, and other niche areas, also need to expand production and improve efficiency. In the devices segment, in addition to existing products such as vibration devices and cemented carbides, permanent magnets are extending into the scale-up of housing stators, and soft magnets are extending into the development of inductors (molded inductors, copper sheet inductors, etc.) and EMC filter devices. Some of these products, after nearly two to three years of cultivation, have laid a good foundation for the company's future development.
2. What is the status of the company's copper sheet inductor cultivation?
DMEGC responded: Copper sheet inductors are a special form of molded inductors, which are core components of chip power supply modules, providing power to the front end of chips to maintain the normal operation of various chips in motherboards and graphics cards. They are widely used in servers, communication power supplies, GPUs, FPGAs, power modules, laptops, and mining machines. For example, the usage in mainstream AI servers is about 200-300 units, and it is expected that the compound growth over the next few years will exceed 20%. DMEGC's copper sheet inductors are already in bulk supply to well-known domestic and overseas customers, with good growth potential in the future.
3. What is the status of the company's EMC filter device cultivation? DMEGC responded: As NEVs rely on complex electronic systems and high-voltage power systems, these systems are prone to electromagnetic interference and also need to prevent external electromagnetic interference from affecting their normal operation. EMC filter devices are mainly applied in motor drive systems, onboard charging systems (OBC), battery management systems (BMS), DC-DC converters, and communication systems, with a single vehicle application value of around 100-200 yuan. So far, the company's EMC filter devices have been designated for development and production by multiple NEV manufacturers, and with the ramp-up of related car models by customers, it will drive the continuous growth of this module business.
4. What are the reasons for the price increases in Europe?
DMEGC responded: Since the beginning of the year, demand in the European market has improved, coupled with the implementation of industry self-discipline and stabilization of raw material prices, which has led to an increase in module prices.
5. Is there a difference between the price increase in Europe and the price increase in China?
DMEGC responded: Due to the fact that starting from June 1, the electricity generated by PV projects will fully enter the power market, there has been a certain rush for installations in China, leading to price increases; overall, European prices still fluctuate based on expected demand and raw material prices.
6. What is the situation with shipments, profitability, and customers in Indonesia?
DMEGC responded: Capacity ramp-up began in Q3 last year, and large-scale shipments started in Q4. Currently, the profit is a few cents per watt. It is expected that shipments will reach 3.5 GW+ in 2025. The end-use market for customers is mainly the US market.
7. Will the proportion of component shipments from Indonesia increase in the future?
DMEGC responded: At present, the focus is on cell shipments, and the company will moderately engage in component shipments.
8. Does the cost of the Indonesian base have an advantage over domestic costs?
DMEGC responded: The cost of the Indonesian base is slightly higher than that of the domestic base, but the product price is also higher. Initially, non-silicon costs were double those of the domestic base, mainly due to investment costs, material transportation costs, and energy costs. As output gradually increases, costs will gradually decrease. There is still some room for cost reduction on the cost side in 2025.
9. What is the profitability of the company's other production bases for battery components besides Indonesia?
DMEGC responded: The company's N-type battery production base is in Yibin, Sichuan, with an actual capacity exceeding 15 GW. N-type batteries are mainly for internal use, and the component production base is mainly in Lianyungang, Jiangsu. Last year, the average profit of the component end was about 4-5 ¢/W.
10. Are the orders from the US both volume-locked and price-locked?
DMEGC responded: Prices may fluctuate, but based on feedback from the end-use market and considering medium and long-term cooperation with partners, there will not be significant fluctuations. The pricing system for major partners will remain basically stable compared to 2024.
11. If the US initiates anti-dumping and countervailing duties on Southeast Asian countries outside the four, what measures will the company take?
DMEGC responded: It is expected that the North American market will bring significant performance flexibility to the company in 2025, but changes in US local manufacturing subsidy policies (such as ITC, PTC, IRA, etc.) and trade policy changes for countries outside the four in Southeast Asia may affect the profitability of the company's overseas bases. The company aims to maintain its advantages through localized production and strict data management. Additionally, while continuously tracking changes in US policies, the company will also look for other potential investment opportunities globally to diversify risks.
12. What is the outlook for lithium batteries this year? What is the proportion of downstream application areas?
DMEGC responded: Last year, 530 million lithium batteries were shipped, with market share in the electric two-wheeler sector further increasing, and breakthroughs were made in markets such as Vietnam, Brazil, and South Korea; the power tool market saw recognition from multiple customers, with shipments more than doubling; shipments in the smart home market also grew significantly. This year, the company plans to continue to grow lithium battery shipments, with a target of over 600 million. Last year, the downstream application of lithium batteries was still mainly in electric two-wheelers, accounting for about 70%, with power tools at 10%+, and the smart home sector at 10%+, with the remainder being ESS and other areas.

When asked, "I recently saw your financial report, although it did not show a significant increase, compared to last year, H1, and the Q3 report of this year, it still showed good performance. My question is, under the unfavorable macroeconomic conditions and facing some development difficulties, why did the company experience rapid growth in H2, especially in Q4, reversing the decline in growth and entering a new phase of prosperity? Was it due to a turning point in the industry or the company itself, particularly the emergence of new economic growth points? Please have the secretary introduce the new developments of the company."

DMEGC responded on the investor interaction platform on March 14 that the operating conditions of all segments in Q4 were good. The magnetic materials business benefited from trade-in policies and increased overseas demand in 2024, providing significant support to profitability; the PV business contributed significantly, with PV product shipments up MoM; lithium batteries also increased. All of these had positive contributions to performance, with PV contributing relatively more. DMEGC's 2024 annual report shows: In 2024, global economic and trade growth slowed down, and factors such as geopolitical tensions, climate change, and supply chain disruptions brought many uncertainties to global economic and industrial development. The PV industry, in particular, faced dual challenges of phased overcapacity and intensified market competition. In this context, the company continued to deepen its differentiated competitive strategy for core businesses and products, strengthened strategic execution, enhanced advanced capacity, focused on fine management, and expanded quality markets, maintaining a steady development trend overall. In 2024, the company achieved revenue of 18.559 billion yuan, down 5.95% YoY, and net profit attributable to publicly listed firm shareholders of 1.827 billion yuan, up 0.46% YoY.

DMEGC's annual report shows: Magnetic Materials and Devices:

Consolidated leading position, stable performance contribution. In 2024, it achieved revenue of 4.578 billion yuan, with 232,000 mt shipped, up 17% YoY. PV Industry: Strengthened differentiated competitive advantages, maintained good profitability against the market. In 2024, it achieved revenue of 11.07 billion yuan, with 17.2 GW shipped, up 73% YoY. Lithium Battery Industry: Focused on the small power sector, with small cylindrical battery shipments ranking among the top three in China. In 2024, it achieved revenue of 2.415 billion yuan, with 531 million units shipped, up 56% YoY.

Looking ahead, DMEGC's 2025 business goal is to achieve double growth in revenue and profitability. For future business priorities, DMEGC introduced: (1) Dual-driven, enhancing risk resistance. The magnetic materials and devices segment will prioritize increasing market share, where permanent magnets will seek breakthroughs in the existing market, soft magnets will expand applications in NEVs, PV, AI, and other fields, becoming an important growth driver for the magnetic materials segment, and plastic magnets will expand production and improve efficiency, consolidating their leading position in niche areas. The PV industry will steadily advance global layout, consolidating advantageous markets in Europe, China, Japan, and South Korea, and fully promoting the expansion of high-quality markets in North America and emerging markets in the Asia-Pacific and Middle East. Adhering to differentiated development, consolidating competitive advantages in "low-carbon markets" and "black modules for residential use," and radiating to the global market through strategic partners, and increasing the market share of large projects through the advantages of the distributed market. The lithium battery industry will increase investment in technological transformation to enhance capacity, focusing on 18-series and 21-series products to create unique features, aiming for full production and sales. (2) Adapt to local conditions, promoting base layout. In 2025, the company will adhere to the principle of prudent operation and risk control, continuing to advance strategic capacity expansion. Domestically, according to market expansion needs, the company will adapt to local conditions to add advanced capacity layouts, reducing investment and management costs, and enhancing industry competitiveness. Overseas, the completed Indonesian battery production base will moderately increase investment to break through capacity bottlenecks, achieving increased production and efficiency, and further planning new layouts to sustain the competitiveness of the company's products in high-quality markets. The construction of the Vietnamese permanent magnet and Thai soft magnet bases will be steadily promoted to meet the diversified procurement needs of customers. The company will also actively promote the construction of PV power station projects, aiming to invest in the construction of multiple centralized power stations above 100 MW and advance commercial and industrial distributed EPC projects to over 100 MW. At the same time, the company will carry out multiple production line upgrades internally to boost high-quality development. (3) Improve quality and efficiency, enhancing product competitiveness. In 2025, the company will strengthen management in production operations, quality management, and the supply chain. In production operations, it will continue to promote lean management and labor-saving work, reducing costs and improving efficiency. Quality management will focus on the "four modernizations," comprehensively standardizing the quality management of the entire product life cycle. Supply chain construction should be both "market-competitive" and "stable," with internal organizational optimization, product structure optimization, and other measures to promote manufacturing cost optimization, thereby enhancing the market competitiveness of products.

(4) New quality production, empowering high-quality development. In 2025, the company will strengthen innovation-driven development, closely follow market demand, utilize innovation platforms, target new materials, new products, and new processes, effectively break through R&D, and empower industrial development. The company will continue to promote digital transformation, optimize administrative, human resources, financial, project, procurement, and sales processes, and build a globally unified operational platform. It will actively practice the concept of green and low-carbon development, enhance supply chain transparency and traceability, increase investment in green product R&D, actively participate in national green manufacturing projects, apply for the "green code for enterprises," optimize waste treatment systems, and effectively reduce corporate waste emissions, achieving a win-win in economic and ecological benefits. Dongwu Securities' research report on its 2024 annual report shows: Deepening overseas markets and the release of Indonesian capacity contributed to profitability: In 2024, the company's PV product shipments reached 17.2 GW, up about 73% YoY. The company focused on high-premium overseas markets, with overseas shipments accounting for 50%+ in 2024.In Q4 2024, the company's PV product shipments exceeded 5GW. With the gradual release of cell capacity in Indonesia, mass production and shipments were achieved in Q4, contributing significantly to profits in the US end-use market. By the end of 2024, the company had established a cell capacity of 23GW (with N-type capacity exceeding 80%) and a module capacity of 17GW. Looking ahead to 2025, we expect the company's PV product shipments to exceed 20GW, with cell shipments from Indonesia expected to surpass 3GW, maintaining steady operations and continuous improvement. Magnetic materials have shown steady progress and persistence: In 2024, magnetic material revenue approached 4.6 billion, with 232,000 mt shipped, up 17% YoY, and gross margin maintained at over 27%. The market share of ferrite permanent magnets was about 22%, driving the casing to enter the high-end market; magnetic powder cores and nanocrystalline devices were designated for development and production by multiple customers in computing power and NEVs. Lithium battery business accelerated growth, with significant volume and profit recovery: In 2024, lithium battery business revenue was approximately 2.4 billion, with 531 million units shipped, up 56% YoY. Benefiting from the bottoming out and rebound of material prices and the warming demand in some small power application markets, the company maintained a high capacity utilisation rate of 7GWh, with gross margin increasing to 12.7% in 2024, showing a clear recovery in both volume and profit. Risk warnings: Intensified competition, changes in international trade and industry policies, and slower-than-expected global expansion, etc.