Innuovo: The wholly-owned grand subsidiary company plans to invest 424 million to construct an expansion project for the annual production of 5,000 mt of sintered NdFeB blanks

Innuovo announced in the evening of June 27:Based on strategic development needs, Zhejiang Dongyang Dongci Rare Earth Co., Ltd., a wholly-owned subsidiary of the company, plans to invest in and construct an expansion project for the annual production of 5,000 mt of sintered NdFeB, with an estimated total investment of approximately 423.81 million yuan. Upon completion, this project will add a production capacity of 5,000 mt of sintered NdFeB magnets annually.The company held the ninth meeting of the tenth board of directors on June 27, 2025, and approved the "Proposal on the Investment and Construction of the Expansion Project for the Annual Production of 5,000 mt of Sintered NdFeB". This investment falls within the approval authority of the company's board of directors and does not require submission to the shareholders' meeting for approval. This investment does not constitute a related-party transaction or a major asset restructuring as defined in the "Measures for the Administration of Major Asset Restructuring of Publicly Listed Firms".

Innuovo also announced the investment objectives, existing risks, and impact on the company in the announcement:

1. Investment objectives and impact on the company:This project aligns with relevant national industrial policies and industry development trends. The construction of this expansion project will further enhance the company's magnetic material product capacity, better meeting the growing market demand for NdFeB magnetic materials, and aligning with the company's strategic planning. Upon completion and operation of this project, it will help expand the company's NdFeB magnetic material business scale, enhance the company's comprehensive strength, and have a positive impact on the company's development in the long run, aligning with the interests of all shareholders and the company's long-term development strategy.

2. Existing risks: The project implementation may be affected by factors such as macroeconomic conditions, industry policies, and changes in the market environment, as well as uncertainties in related planning, approvals, construction environment, and resource inputs, leading to risks such as project delays, implementation falling short of expectations, changes in project planning, or termination. The company will strengthen its operational management, promptly monitor changes in the market environment, national, and industry policies, and actively prevent and mitigate various risks. The company will subsequently fulfill its information disclosure obligations in a timely manner according to the progress of the project and in compliance with relevant laws and regulations. Investors are advised to pay attention to investment risks.

In addition, the following content is from the investor relations activity record sheet announced by Innuovo on June 18:

1. What is the company's current magnetic material capacity? What is the capacity utilization rate? What is the proportion of magnetic material exports? What are the downstream application areas?

Innuovo responded:The company has two magnetic material production sites in Hengdian and Ganzhou. Currently, the capacity for magnetic material blanks is approximately 13,000 mt, with a capacity utilization rate of approximately 80%. In 2024, the company's sales of finished magnetic materials exceeded 6,200 mt, and the export proportion of the magnetic material business accounted for 20-30%. Currently, the company's magnetic material products are widely used in downstream fields such as the automotive sector, high-end audio, energy-efficient motors, traction machines, and smart consumer electronics.

2. What is the company's situation regarding raw material procurement and inventory?

Innuovo responded: The company has established long-term and good cooperative relationships with major raw material suppliers, including China Rare Earth and China Northern Rare Earth, adopting a procurement model that combines long-term agreements with flexible purchasing. The company's production is mainly scheduled according to customer orders, with raw material inventory basically maintained at around two months. The company also prudently adjusts its procurement and inventory strategies based on the trend of raw material prices.

3. What is the company's situation regarding export licenses?

Innuovo responded: Since the implementation of the export control policy, the company has actively taken measures in accordance with relevant requirements, applying for export licenses for permanent magnet products subject to export controls. Currently, a small number of orders have successively obtained export licenses.

4. What are the main downstream application fields of the company's electromechanical products? What is the export proportion and the main export regions?

Innuovo responded: Currently, the downstream applications of the company's electromechanical products mainly include health mobility, smart home appliances, garden and agricultural machinery, and security systems. The export proportion of motors is around 60-70%, mainly exported to Europe, America, Asia, and other regions.

5. What is the development situation of the company's health equipment business? What are the reasons for its good development?

Innuovo responded: The company's health equipment products mainly include electric wheelchairs and electric scooters, primarily using materials such as iron, aluminum, carbon fiber, and magnesium alloy, with a positioning mainly in the mid-to-high-end market. In China, the products are mainly sold through online channels such as Tmall, JD.com, Pinduoduo, and Douyin, focusing on building domestic private brands. Overseas, the business mainly involves ODM and OEM. Overseas business accounts for approximately 70-80% of the total.

The development of the company's health equipment business benefits from the company's brand building, the application of new carbon fiber materials, market expansion of related products, economies of scale in production, as well as continuous automation upgrades, lean management, and cost optimization.

6. What aspects of business development will the company's Vietnam base mainly be used for?

Innuovo responded: The company's Vietnam base will mainly serve as a production site for motors, health equipment, and electro-acoustic products.

7. What are the future development plans for the company's electronic acoustics business?

Innuovo responded: The company's electronic acoustics products mainly include speakers, as well as terminal audio and headphone products. In the future, the company will further expand into high-end automotive audio and continue to expand product categories, target high-end customers, and increase the development of customized products in the consumer electronics field.

8. What are the company's plans for humanoid robots? Are its products applied in the low-altitude economy sector?

Innuovo responded: Currently, a small quantity of the company's motor and reducer products are applied in industrial robots. The company will continue to monitor and closely follow the development trends of the robotics industry, focusing more on future commercial mass deployment, and preparing well in terms of talent, technology, and product reserves. Currently, the company produces a small quantity of electric push rods for drone base stations.

9. What is the company's overall strategic layout and positioning?

Innuovo responded: The company adheres to the development strategy of "refining electromechanical products, strengthening magnetic materials, and optimizing downstream applications," with each business forming a collaborative development of the upstream and downstream industry chains. Centered around its current business structure and management framework, the company leverages complementary strengths and resource sharing, advancing simultaneously with motors as the foundation, upstream magnetic materials, and downstream applications for common development.

According to Innuovo's Q1 2025 report, in the first quarter of 2025, the company achieved a total operating revenue of 840 million yuan, down 6.17% YoY; net profit attributable to shareholders was 68.8231 million yuan, up 4.01% YoY; net profit excluding non-recurring items was 56.8379 million yuan, down 9.63% YoY; net cash flow from operating activities was 103 million yuan, up 234.16% YoY. During the reporting period, Innuovo's basic earnings per share were 0.0627 yuan, and the weighted average return on net assets was 2.53%.

Regarding the company's main businesses, Innuovo introduced in its 2024 annual report: The company is a high-tech enterprise engaged in the diversified development of R&D, production, and sales of NdFeB permanent magnet materials, motor series products, health equipment products, and electronic acoustic products. The company specializes in producing sintered and bonded NdFeB permanent magnet materials and their magnetic components, with two NdFeB production sites in Hengdian and Ganzhou. Its products are mainly applied in the automotive sector (including NEVs), high-end audio, energy-efficient home appliances, traction machines, servo motors, smart consumer electronics, wind power generation, and other fields. The company's motor series products mainly include micro and special motors such as AC, permanent magnet DC, brushless, stepper, and servo motors, as well as electric push rod actuators, parallel shaft, worm gear, planetary gear reducers, harmonic reducers, and various motor drivers. These products are widely applied in health mobility, garden and agricultural machinery, specialty home appliances, security fields, intelligent logistics, and other areas. Meanwhile, the company extends its downstream applications, currently involving the production and sales of health equipment products such as electric wheelchairs, elderly scooters, and walkers, as well as electro-acoustic products such as loudspeakers.

Regarding the company's future development strategies and operational plans, Innuovo stated in its 2024 annual report: The company will closely adhere to the development strategy of "refining electromechanical products, strengthening magnetic materials, and optimizing downstream applications," continuously exploring market demands, targeting the industry's cutting-edge trends, fully leveraging the collaborative advantages of the industry chain, and strengthening its core businesses. It will implement intelligent manufacturing empowerment, based on advanced manufacturing, deepen and solidify digital and intelligent construction, and create intelligent factories. Driven by its own brand, it will consolidate its technological foundation, establish high-quality leading benchmarks, and promote the upgrading of the company's brand image. It will adapt to the profound changes in global politics and the economy, promote the implementation of the "going global" strategy, and accelerate its international layout. It will attach importance to the development and changes in the capital market, enhance its capital operation capabilities, and upgrade its industrial capabilities.