JL MAG Rare-Earth: Delivered small batches of products in both the robotics and low-altitude aircraft sectors, with a capacity utilisation rate exceeding 90% in Q1

On May 26, JL MAG Rare-Earth announced that Ganzhou Geshuo, a concerted actor of the controlling shareholder, had pledged 1.8 million shares it held, accounting for 20.92% of its total shareholding and 0.13% of the company's total share capital. As of the announcement disclosure date, Ganzhou Geshuo had cumulatively pledged 3.8 million shares, representing 44.17% of its total shareholding and 0.28% of the company's total share capital.

The Q1 report previously released by JL MAG Rare-Earth showed that in the first quarter of this year, the company achieved operating revenue of 1.754 billion yuan, up 14.19% YoY; net profit attributable to shareholders of the publicly listed firm was 161 million yuan, up 57.85% YoY; and net profit excluding non-recurring gains and losses was 106 million yuan, up a substantial 331.10% YoY. On the evening of April 27, JL MAG Rare-Earth also announced that it planned to repurchase shares worth 100 million to 200 million yuan for cancellation and reduction of registered capital. The repurchase price would not exceed 31.18 yuan per share.

The Q1 report of JL MAG Rare-Earth indicated that the company is a leading enterprise in the global rare earth permanent magnets industry, primarily engaged in R&D, production, and sales of high-performance NdFeB permanent magnet materials, magnetic components, motor rotors for embodied robots, as well as the comprehensive recycling and utilization of rare earth permanent magnet materials. In Q1 2025, the company's management actively explored the market and simultaneously expanded capacity, maintaining stable operations. The company continued to focus on the new energy and energy-saving and environmental protection sectors, concentrating on core application areas such as NEVs and automotive parts, energy-saving inverter air conditioners, wind power generation, robots and industrial servo motors, 3C products, and low-altitude aircraft. It also actively collaborated with internationally renowned technology companies in the R&D and capacity construction of motor rotors for embodied robots, with small-batch deliveries being made sequentially. During the reporting period, the company achieved operating revenue of 1.754 billion yuan, up 14.19% YoY; net profit attributable to shareholders of the publicly listed firm was 161 million yuan, up 57.85% YoY; and net profit excluding non-recurring gains and losses was 106 million yuan, up 331.10% YoY. 1. In Q1 2025, the company's new capacity was further released, with the capacity utilization rate exceeding 90%. The production of magnetic material blanks was approximately 8,770 mt, the production of finished magnetic materials was approximately 6,600 mt, and the sales of finished magnetic materials were approximately 6,024 mt, all showing growth of over 40% compared to the same period last year. 2. The company is a leading supplier in global application areas such as NEVs and energy-saving inverter air conditioners. In Q1 2025, the company's revenue from the NEV and automotive parts sector was 882 million yuan, accounting for 50.28% of operating revenue; revenue from the energy-saving inverter air conditioner sector was 513 million yuan, accounting for 29.25% of operating revenue. In addition, export sales revenue during the reporting period was 312 million yuan, accounting for 17.76% of operating revenue, of which export sales revenue to the US was 122 million yuan, accounting for 6.94% of operating revenue.

Additionally, the institutional survey record disclosed by JL MAG Rare-Earth on May 22 addressed the company's Q1 2025 operational performance, developments in embodied robotics and low-altitude aircraft businesses, as well as capacity utilization and revenue structure during Q1 2025.

1. Please briefly introduce the company's Q1 2025 operational performance.

JL MAG Rare-Earth responded: In Q1 2025, the management proactively expanded market reach while scaling up capacity, maintaining steady operations. The company continued focusing on new energy and energy-saving environmental protection sectors, specializing in core applications including NEVs & auto parts, energy-efficient inverter air conditioners, wind power generation, robotics & industrial servo motors, 3C products, and low-altitude aircraft. It also collaborated with internationally renowned tech firms on R&D and capacity building for embodied robotics motor rotors, achieving small-batch deliveries. During Q1 2025, the company recorded revenue of 1.754 billion yuan (up 14.19% YoY), net profit attributable to shareholders of 161 million yuan (up 57.85% YoY), and adjusted net profit excluding non-recurring items of 106 million yuan (up 331.10% YoY).

2. Updates on embodied robotics and low-altitude aircraft businesses?

JL MAG Rare-Earth responded:The company is actively supporting a globally leading tech company in R&D and capacity construction for embodied robotics motor rotors, with small-batch deliveries underway.Currently, dedicated facilities, equipment, and teams have been deployed per client requirements, establishing preliminary mass-production capabilities. Future plans include increased R&D investment in this sector and advancing industrialization support to meet growing market demand. Additionally, small-batch deliveries have commenced in the low-altitude aircraft segment.

3. Capacity utilization and revenue structure in Q1 2025?

JL MAG Rare-Earth responded:In Q1 2025, new capacity was further ramped up with utilization exceeding 90%. Production reached approximately 8,770 mt of magnetic material blanks and 6,600 mt of finished products, while sales of finished products totaled ~6,024 mt, all exceeding 40% growth YoY.

The company is a global leader supplying NEVs and energy-efficient inverter air conditioners. In Q1 2025, revenue from NEVs & auto parts reached 882 million yuan (50.28% of total), with energy-efficient inverter air conditioners contributing 513 million yuan (29.25%). Additionally, export sales revenue during the reporting period was 312 million yuan, accounting for 17.76% of the operating revenue. Among this, export sales revenue to the US was 122 million yuan, accounting for 6.94% of the operating revenue.

4. Could you please provide an update on the progress of the company's plan to repurchase A-shares in 2025?

JL MAG Rare-Earth responded: Based on confidence in the company's future development prospects and recognition of its value, the company's board of directors has resolved to repurchase A-shares through centralized bidding transactions using the company's own funds or self-raised funds (including special loans for share repurchases). Self-raised funds (including special loans for share repurchases) will account for no more than 90% of the total repurchase funds. The total amount of funds for the share repurchase will be no less than 100 million yuan (inclusive) and no more than 200 million yuan (inclusive). All shares repurchased in this transaction will be cancelled in accordance with the law to reduce the registered capital. The implementation of this plan to repurchase A-shares is subject to approval at the company's 2024 Annual General Meeting of Shareholders.

5. Could you please provide information on the company's raw material supply situation?

JL MAG Rare-Earth responded: The company has established production facilities in Ganzhou, Jiangxi Province, a major producer of heavy rare earths, and in Baotou, Inner Mongolia, a major producer of light rare earths. The company has established long-term strategic cooperative relationships with major rare earth raw material suppliers, including China Northern Rare Earth Group and China Rare Earth Group. In 2024, the company's procurement amount from China Northern Rare Earth Group and China Rare Earth Group accounted for 63% of the company's total annual procurement amount.

Meanwhile, the company prioritizes the procurement of green recycled rare earths. Through its investment in Bayannaoer Yinhai New Materials Co., Ltd., a rare earth recycling company, and after rigorous audits by SCS Global Services, a globally recognized authority on recycled content certification, the company has diversified its rare earth raw material supply and achieved low-carbon products. In 2024, the company used 2,575 mt of recycled rare earth raw materials (including recycled scrap magnets), accounting for 30.4% of the total rare earth raw materials used throughout the year.

Guided by the company's values of "customer orientation and value co-creation," the company consistently adheres to honest performance of contracts to ensure client delivery. To this end, the company has established a comprehensive rare earth raw material procurement mechanism to hedge against risks. In the future, the company will closely monitor the price trends of rare earth raw materials and flexibly and prudently adjust inventory and procurement strategies.

At the earnings presentation meeting,JL MAG Rare-Earth stated when introducing the company's full-year performance for 2024: In 2024, led by the management team under the guidance of the company's core values of "customer orientation and value co-creation," the company remained focused on its main business, overcoming unfavourable factors such as the significant decline and bottoming out of rare earth raw material prices since 2022. The company actively expanded its business and strived to expand and release capacity in accordance with the strategic plan formulated by the board of directors. In 2024, rare earth raw material prices showed a downward trend YoY. The lag in raw material cost adjustments, coupled with intensified industry competition and other unfavourable factors, adversely impacted the company's operating performance. The management promptly implemented effective countermeasures, actively expanded market presence while simultaneously increasing capacity, maintaining stable operations. During the reporting period, the company continued to focus on the new energy and energy-saving environmental protection sectors, specializing in core application fields such as NEVs and auto parts, energy-saving variable-frequency air conditioners, wind power generation, robots and industrial servo motors, 3C products, and low-altitude aircraft. In 2024, the company achieved operating revenue of 6.763 billion yuan, up 1.13% YoY. Domestic sales revenue reached 5.541 billion yuan (up 1.88% YoY), while overseas sales revenue totaled 1.222 billion yuan, including approximately 418 million yuan in exports to the Americas. Net profit attributable to shareholders of the publicly listed firm was 291 million yuan, down 48.37% YoY. Net cash flow from operating activities amounted to 508 million yuan.

Regarding the company's full-year 2024 production, sales, and product structure: JL MAG Rare-Earth responded at the earnings briefing: In 2024, the company's capacity utilization rate exceeded 90%, with high-performance magnet blank production reaching approximately 29,300 mt (up 39.48% YoY) and finished high-performance magnet sales totaling 20,900 mt (up 37.88% YoY), setting record highs in both production and sales volume. According to publicly available industry statistics, the company has become the top-ranked enterprise in terms of production and sales volume in the rare earth permanent magnet industry, both domestically and globally. The company's 2024 sales revenue in NEVs, variable-frequency air conditioners, and wind power generation sectors is as follows:

Regarding the main reasons for the YoY decline in 2024 net profit: JL MAG Rare-Earth responded at the earnings briefing: In 2024, rare earth raw material prices showed a downward trend YoY. The lag in raw material cost adjustments, coupled with intensified industry competition and other unfavourable factors, adversely impacted the company's operating performance. In 2024, leveraging relatively sufficient orders on hand, the company actively planned its layout, expanded capacity, coordinated group resources, and advanced projects such as JL MAG Ningbo Technology and Jin Cheng Permanent Magnet, making extensive preparations for reaching full production. This led to temporary increases in product unit costs and management expenses at these subsidiaries, affecting net profit. JL MAG Ningbo Technology alone contributed approximately -57.56 million yuan to consolidated net profit. Despite the adverse impact of declining rare earth raw material prices, the company continued R&D investments, actively expanded into the humanoid robot magnetic components sector, promoted production management informatization and automation for cost reduction and efficiency improvement. Additionally, the execution of price-locked orders signed with certain clients when rare earth material prices were at relatively high levels gradually commenced after Q3, leading to progressive improvements in profitability during Q3 and Q4.

Recently, several securities firms have published research reports on JL MAG Rare-Earth, with some of the content as follows:

Huayuan Securities issued a research report on May 22, recommending a "Buy" rating for JL MAG Rare-Earth. The reasons for the rating include: 1) The company possesses both cyclical and growth attributes, with sustained expansion in demand for high-performance rare earth permanent magnets; 2) Having experienced the cycle and enjoyed growth, the top-tier enterprise in rare earth permanent magnets continues to deliver performance; 3) The first year of the humanoid robot industry has begun, and the Mexico project opens up long-term growth opportunities. Risk warnings: Demand fluctuation risks, risks of project construction falling short of expectations, risks of raw material fluctuations, risks of new business expansion falling short of expectations, and risks of deviations in market space estimates.

Ping An Securities issued a research report on April 30, recommending a "Buy" rating for JL MAG Rare-Earth. The reasons for the rating include: 1) Rapid rebound in production and sales of high-performance magnetic materials; 2) Gradual improvement in quarterly profitability; 3) Steady progress in capacity expansion. Risk warnings: (1) Project progress falling short of expectations. If the current projects under construction progress unexpectedly slowly, it may affect the company's future earnings growth pace. (2) Downstream demand falling short of expectations. If demand contracts significantly due to end-user influences, the company's product sales may be affected to a certain extent. (3) Intensified industry competition. A significant increase in industry competition may lead to the company's product sales falling short of expectations.

Sinolink Securities issued a research report on April 28, recommending a "Buy" rating for JL MAG Rare-Earth. The reasons for the rating include: 1) Both volume and price increased, with performance exceeding expectations; 2) Overall expense control was good, and R&D expenses continued to grow; 3) Attention is paid to the overall rebound in rare earth prices, from which the company is expected to benefit. Risk warnings: Demand falling short of expectations; fluctuations in rare earth prices; magnetic material supply exceeding expectations.

Reviewing the price trends of Pr-Nd alloy in the first quarter of this year and 2024, it can be seen that:

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Reviewing the price trends of Pr-Nd alloy in the first quarter of this year, it can be seen that: The average price of Pr-Nd alloy on March 31, 2025, was 543,000.00 yuan/mt, an increase of 54,000 yuan/mt compared to the average price of 489,000 yuan/mt on December 31, 2024, representing an increase of 11.04%. The daily average price of Pr-Nd alloy in the first quarter of this year was 528,017.54 yuan/mt, an increase of 55,965.82 yuan/mt compared to the daily average price of 472,051.72 yuan/mt in the first quarter of 2024, representing an increase of 11.86%.

Reviewing the price trends of Pr-Nd alloy in 2024, it can be seen that: The average price of Pr-Nd alloy on December 31, 2024, was 489,000 yuan/mt, a decrease of 53,000 yuan/mt compared to the average price of 542,000 yuan/mt on December 29, 2023, representing a decrease of 9.78% in 2024. The annual daily average price of Pr-Nd alloy in 2024 was 484,704.55 yuan/mt. Compared with the annual daily average price of 645,330.58 yuan/mt in 2023, the annual daily average price fell by 160,626.03 yuan/mt, representing a YoY decline of 24.89%.

According to SMM quotes, on May 26, the price of Pr-Nd alloy dropped to the range of 534,000-537,000 yuan/mt, with an average price of 535,500 yuan/mt, up 1.61% from the previous trading day. Compared with the average price of 489,000 yuan/mt on December 31, 2024, it increased by 46,500 yuan/mt, a rise of 9.51%. Compared with the average price of 543,000 yuan/mt on March 31, it slightly decreased by 7,500 yuan/mt, a drop of 1.38%. It is reported that recent raw material purchases by major manufacturers have boosted the confidence of some suppliers, leading to a tightening of low-priced supplies in the market, which in turn supported the rise in rare earth prices. Given the relatively high cost of raw materials, metal manufacturers have also raised their quotes accordingly. Currently, there is a strong wait-and-see sentiment in the market, with downstream buyers being cautious in their purchases. As upstream and downstream players remain in a stalemate, the future market will need to continue monitoring the import situation of ion-adsorption ore after Southeast Asia gradually enters the rainy season, as well as the progress of end-use demand gradually emerging from the off-season.