Huahong Technology: Annual capacity of rare earth permanent magnets is 15,000 mt, and the existing capacity of regenerated rare earth oxides is 12,000 mt/year.

On May 28, the share price of Huahong Technology rose. As of 10:53 a.m. on the 28th, Huahong Technology was up 0.49%, trading at 8.18 yuan per share.

An investor asked on the investor interaction platform: "What is the company's capacity for terbium oxide and dysprosium oxide?" Huahong Technology responded on the investor interaction platform on May 28:The company's comprehensive utilisation business of rare earth resources mainly involves the recycling and processing of magnetic material scrap and scrap permanent magnet materials to extract regenerated rare earth oxides. The company currently has a capacity of 12,000 mt/year for regenerated rare earth oxides. The production of different types of rare earth oxides mainly depends on the content of each rare earth element in the scrap. In 2024, the company actually produced approximately 115 mt of dysprosium oxide and approximately 25 mt of terbium oxide.

When asked, "What is the current capacity of rare earth permanent magnet materials? What is the company's position in the permanent magnet industry? Are they considered high-end materials?" Huahong Technology responded on the investor interaction platform on May 28 that the company's annual capacity for rare earth permanent magnet materials is 15,000 mt. The company has been deeply involved in the rare earth permanent magnet materials industry for many years, accumulating certain industry experience and industrial advantages. In recent years, the company has continued to increase its investment in the rare earth permanent magnet business, continuously improving production efficiency and product performance through measures such as capacity expansion, technological innovation, and management optimisation, and continuously enriching the application fields of its products. Currently, the company's high-performance magnetic materials have been applied in industries such as NEV motors, industrial drive motors, and 3C electronics, and the company has established business cooperation with relevant enterprises in the industry.

In response to the question, "How is the quality of the company's rare earth permanent magnet materials? Can they be used in high-end motors and robotics?" Huahong Technology responded on the investor interaction platform on May 28:The company's high-performance magnetic materials have been applied in industries such as NEV motors, industrial drive motors, and 3C electronics, and the company has established business cooperation with relevant enterprises in the industry.

In addition, when asked, "Are the company's future business development priorities the rare earth resource comprehensive utilisation and magnetic materials sectors? What is the current development situation of the rare earth industry? Will they be the company's future profit growth points?" Huahong Technology introduced at the performance briefing: The sales proportion of the company's rare earth resource comprehensive utilisation business and rare earth permanent magnet materials business has accounted for more than 60% of the company's total sales, being the main source of contribution to the company's performance. In recent years, the company has also continued to increase its investment in these two industrial sectors, continuously expanding its capacity scale. Benefiting from the rapid development of industries such as NEVs, industrial automation, energy-efficient home appliances, and servo motors, the downstream demand for rare earth products is also increasing, which will have a positive impact on the company's business development. The company's performance is subject to its periodic reports and earnings forecasts.

In response to the questions "1. What were the reasons for the company's increased losses in 2024? Has the company taken any measures to reverse the losses? 2. What were the reasons for the successful turnaround in Q1? Is it related to the improvement in the industry's fundamentals?" at the earnings briefing, Huahong Technology stated: In 2024, the company made impairment provisions of RMB 334 million for the goodwill arising from the acquisition of Jiangsu Wellman, which led to an expansion of the net loss attributable to shareholders to RMB 356 million. Excluding the impact of the impairment provisions for goodwill, the company's operating performance in 2024 had significantly reduced losses compared to 2023. In Q1 2025, domestic rare earth prices stopped falling and rebounded, coupled with an increase in the company's capacity utilisation rate for rare earth oxides, driving a significant YoY improvement in gross profit margin. Meanwhile, the company seized the development opportunities in the permanent magnet motor market, achieving substantial YoY growth in the production and sales of high-performance magnetic materials. The gross profit margin also increased significantly, ultimately leading to a turnaround from losses to profits in Q1.

Reviewing the price trend of rare earths, we can observe that:

》Click to view SMM rare earth spot prices

》Subscribe to view historical price trends of SMM metal spot prices

Taking the price trend of Pr-Nd oxide in Q1 as an example: Compared to the end of 2024, the price of Pr-Nd oxide generally increased in Q1 2025. Reviewing the price trend of SMM Pr-Nd oxide in Q1, we can see that the average price of Pr-Nd oxide on March 31 this year was RMB 444,500/mt, an increase of RMB 46,500/mt compared to the average price of RMB 398,000/mt on December 31, 2024, with a Q1 increase of 11.68%. Comparing the daily average price of Pr-Nd oxide in Q1 2025 (RMB 429,605.26/mt) with that in Q1 2024 (RMB 381,646.55/mt), we can see that the daily average price in Q1 this year increased by 12.57% YoY.

Reviewing the average price trend of SMM Pr-Nd oxide in 2024, we can see that the average price on December 31, 2024, was RMB 398,000/mt, a decrease of RMB 44,500/mt compared to the average price of RMB 442,500/mt on December 29, 2023, representing a 10.06% decline in 2024. The annual daily average price of Pr-Nd oxide in 2024 was RMB 391,871.9/mt, a decrease of RMB 137,402.89/mt compared to the annual daily average price of RMB 529,274.79/mt in 2023, representing a 25.96% YoY decline.

According to the latest SMM quotes, the average price of SMM Pr-Nd oxide on May 28 was RMB 435,000/mt, unchanged from the previous trading day. It is reported that recently, most rare earth miners are still reluctant to sell their holdings, with low enthusiasm for shipping. Separation plants are facing difficulties in sourcing raw materials. After a series of large-scale raw material purchases by major plants boosted the confidence of some suppliers, leading to an increase in rare earth prices, with the end of the major plants' purchasing activities, the market is currently experiencing strong wait-and-see sentiment. Downstream buyers are cautious in purchasing, and on May 27, the prices of rare earth oxides generally showed a slight downward trend. Downstream purchasing enthusiasm was low, with relatively few actual transactions in the market, and the price of Pr-Nd fluctuated within a narrow range. It is expected that short-term rare earth prices may remain relatively stable amid increasingly intense back-and-forth negotiations between upstream and downstream.