Instart: Plans to Invest RMB 650 Million in Integrated Application Project for Rare Earth Permanent Magnet Materials; Exports Accounted for 57.13% of Revenue Last Year

INST announced on June 19: To further implement the company's future development strategic plan, expand the capacity of advantageous products, and enhance the company's comprehensive strength, the company and/or its newly established wholly-owned or holding subsidiaries will invest in the construction of an integrated rare earth permanent magnet materials application project in Baotou City using their own funds and/or self-raised funds. The total investment in the project is expected to be 650 million yuan (the final total investment in the project will be subject to actual investment).

Regarding the purpose of the investment and its impact on the company, INST's announcement states: (1) Investment Purpose: This project aims to achieve high-performance, low-cost, and large-scale production of rare earth permanent magnet materials through technological innovation and industrial upgrading, thereby enhancing the market competitiveness of rare earth permanent magnet devices in emerging fields. The company expects to leverage its years of accumulated technology and experience in the field of rare earth permanent magnet materials and devices, as well as the local abundance of rare earth resources, to form an integrated industry chain for rare earth permanent magnet materials and application development. (2) Impact on the Company: The construction of this project will help the company improve its industrial layout and product structure, expand its business scale, and meet customer demand for rare earth permanent magnet material application devices in fields such as drive motors, micro and special motors, and joint motors, thereby enhancing the company's market position within the industry. It is expected that this project will open up new profit growth points for the company, improve its profitability and risk resistance capabilities, and promote the company's long-term and stable development. In addition, the implementation of the project will help attract and cultivate more professional talents, further enhance the company's technological R&D level and innovation capabilities, and lay a solid foundation for the company's future sustainable development.

The funds for the company's current investment and construction project are sourced from the company's and/or its wholly-owned or holding subsidiaries' own funds and/or self-raised funds, which will not affect the normal operation of the company's existing main businesses, and there is no situation that would harm the interests of the company and all its shareholders. The company will appropriately arrange the use of funds based on specific circumstances such as the project implementation progress. The construction, commissioning, and production and operation of the project will require a certain amount of time, and it is expected that it will not have a significant impact on the company's operating performance in 2025. The implementation of this project will not affect the company's business independence, and there is no situation that would harm the interests of the company and all its shareholders.

When asked, "The company has strong profitability, with high profits and gross margins. How does the company stand out among its peers and continue to maintain its leading edge?" INST responded on the investor interaction platform on June 19: The company's core competitive advantages are mainly reflected in its advantages in magnetic circuit design and production manufacturing processes, as well as its advantages in deeply cultivating the consumer electronics field. The company's magnetic circuit design aims to maximize cost savings for customers by achieving superior magnetic performance with fewer raw materials through rational component structure design and material selection. The company's production and manufacturing processes adhere to market demand orientation, continuously pursuing technological progress. It has mastered a series of core technologies in key process steps, possesses mature R&D capabilities for automated equipment, and can further enhance product quality, improve production efficiency, and reduce production costs. Meanwhile, leveraging its long-term technological reserves in the consumer electronics sector, the company holds prominent advantages in single-magnet application devices and magnetic component application devices for end-use applications in the consumer electronics field.

In response to the question, "Which countries are the company's rare earth permanent magnet devices mainly exported to, and what is the approximate proportion of exports in revenue? Have your company's rare earth permanent magnet devices been applied to robots?", INST replied on the investor interaction platform on June 19: In 2024, the proportion of the company's export revenue was 57.13%. The company's exported products are mainly sold to domestic bonded areas, with a relatively small proportion of direct overseas exports, which are primarily sold to Southeast Asian countries. Currently, the company's robot-related products are mainly supplied to the industrial robot and service robot sectors.

When asked, "Has there been a significant increase in the prices of the company's exported products this year compared to the same period last year? " INST replied on the investor interaction platform on June 19: The company adopts a cost-plus pricing model. The prices of its exported products are influenced by multiple factors such as fluctuations in raw material prices, market supply and demand, and exchange rates, with variations existing among different customers and products.

According to the 2025 Q1 report previously released by INST, in the first quarter of this year, the company achieved a total operating revenue of 263 million yuan, up 11.42% YoY; net profit attributable to shareholders of the parent company was 40.9863 million yuan, up 109.05% YoY.

INST's 2024 annual report shows: In 2024, the company achieved a total operating revenue of 1.185 billion yuan, up 24.45% YoY; net profit attributable to shareholders of the parent company was 177 million yuan, up 28.15% YoY.

When introducing the company's main business and product situation in its annual report, INST mentioned: The company is a high-tech enterprise primarily engaged in the R&D, production, and sales of rare earth permanent magnetic material application devices. The company focuses on the development of end-use application technologies for magnetic devices, providing customers with comprehensive solutions including magnetic circuit design, precision machining, surface treatment, and intelligent assembly. Based on end-customers' requirements for new products in terms of functionality and design, the company simultaneously participates in the development of magnetic devices for new products, offering complete technical support for the design, trial production, testing, and optimization of magnetic devices. The company's main products include single-magnet application devices and magnetic assembly application devices, which are used in laptops, tablets, smartphones, electronic accessories, smart home devices, motor products, etc. Since its establishment, the company has been deeply committed to the consumer electronics sector. With its outstanding R&D and design capabilities, manufacturing processes, and good product quality, it has gained recognition and trust from downstream customers for its products, becoming one of the major suppliers of rare earth permanent magnet material application devices for many internationally renowned consumer electronics brands.

Regarding its operational plan for 2025, INST introduced in its annual report:

(1) Construction plan for ongoing projects With the continuous expansion of downstream consumer electronics application market demand and the rapid development of emerging application fields such as NEVs, the company's business scale will continue to expand. In 2025, the company will continue to advance the construction of the "Expansion Project for High-end Magnetic Materials and Components for Consumer Electronics and NEVs". Currently, sintered materials have achieved large-scale mass production, and the main building of the project has been fully accepted. In 2025, the company will continue to invest funds in automation equipment, intelligent production lines, and inspection equipment for this project. It will accelerate the completion of the "R&D Center Construction Project", focusing on product R&D that supports the company's medium and long-term development needs based on in-depth analysis and accurate understanding of the market. It will increase R&D efforts in consumer electronics segments, NEV motors, and automotive electronics, optimize and improve processes, master a batch of core technologies, and continuously develop new products with market prospects and competitiveness, such as molded, soft magnetic, and MIM products, to meet the rapid expansion needs of downstream application fields and provide important support for the innovation of the company's business. It will steadily advance the "Smart Factory 4.0 Platform Construction Project" to promote interconnection and intercommunication of the company's data, enhance internal operational management capabilities, build a personalized supply chain system, achieve collaboration between the front and back ends of the industry chain, and ultimately form a powerful creative system that supports the company's innovative, creative, and original work. (2) Market expansion plan, (3) Technology development plan, (4) Lean production improvement plan.

The performance of rare earth enterprises is closely related to the fluctuations in rare earth prices. Reviewing the price trend of Pr-Nd alloy in Q1 of this year and 2024, it can be seen that:

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Reviewing the price trend of Pr-Nd alloy in Q1 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 Q1 this year was 528,017.54 yuan/mt, representing an increase of 55,965.82 yuan/mt compared to the daily average price of 472,051.72 yuan/mt in Q1 2024, with a growth rate of 11.86%.

Reviewing the price trend 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, with a decline rate of 9.78% in 2024. The annual daily average price of Pr-Nd alloy in 2024 was 484,704.55 yuan/mt, a decrease of 160,626.03 yuan/mt compared to the annual daily average price of 645,330.58 yuan/mt in 2023, with a YoY decline rate of 24.89%.

According to the latest quotes from SMM, on June 23, the price of Pr-Nd alloy remained in the range of 543,000 to 547,000 yuan/mt, with an average price of 545,000 yuan/mt. Recently, due to climatic factors, imports of Myanmar ore have significantly decreased, and suppliers holding ore have shown a weak willingness to sell, strengthening the support for rare earth prices from the supply side. On the demand side, it is still the off-season for traditional industries, and downstream magnetic material enterprises have not seen a significant increase in orders. Weak demand will suppress the rise in rare earth prices. It is expected that rare earth prices will continue to run steadily under the condition of weak supply and demand.