Tungsten Holdings of Xiamen: Has successively obtained rare earth export licenses and conducted exports after obtaining the licenses

An investor inquired on the investor interaction platform: "Does your company, which claims to have an entire industry chain in the rare earth sector, produce special-purpose magnets and high-end magnetic products?" On June 30, XTC New Energy Materials (Xiamen) Co., Ltd. responded on the investor interaction platform, "The company's rare earth industry primarily produces high-purity rare earth oxides, rare earth metal processing, luminescent materials, high performance magnetic materials, and optoelectronic crystals."

Regarding the question, "Has your company applied for rare earth export licenses from the Ministry of Commerce, and if so, when will they be approved?" XTC New Energy Materials (Xiamen) Co., Ltd. stated on June 30 on the investor interaction platform, "For products subject to rare earth export controls, the company has successively obtained export licenses from relevant national authorities and exports them after approval."

In response to the question, "The downstream permanent magnet market assigns a relatively high valuation to rare earths. What is your company's market share in the downstream permanent magnet sector?" XTC New Energy Materials (Xiamen) Co., Ltd. replied on June 30 on the investor interaction platform, "According to the XTC New Energy Materials (Xiamen) Co., Ltd. Q1 2023 Report, the sales of magnetic materials, a key deep-processed product in the company's rare earth business, rose 49% YoY in Q1 2025, with revenue up 35% YoY."

When asked, "Is your company a top-tier enterprise in the tungsten, molybdenum, and rare earth sectors?" XTC New Energy Materials (Xiamen) Co., Ltd. responded on June 30 on the investor interaction platform, "As a leading enterprise in China's tungsten industry, the company possesses a complete tungsten industry chain, with prominent competitive advantages in tungsten mining, smelting, powder production, wire materials, and deep-processed hard alloy products. Additionally, leveraging its unique green molybdenum smelting technology and internationally advanced molybdenum powder processing technology, the company has established a globally leading green smelting molybdenum production site. In the rare earth sector, the company has built a synergistic system covering the entire industry chain, securing stable upstream resource supply through strategic equity participation in mining and smelting and separation, while independently developing high-value-added downstream segments, including high-purity rare earth oxides, rare earth metal processing, luminescent materials, high performance magnetic materials, and optoelectronic crystals, forming a closed-loop industry chain. As a key national rare earth group, the company holds a significant industry position."

Regarding the question, "How does the surge in tungsten prices impact your company's profits? What is the proportion of tungsten and molybdenum business in your revenue?" XTC New Energy Materials (Xiamen) Co., Ltd. stated on June 30 on the investor interaction platform, "The company has a complete industry chain encompassing upstream tungsten mining and beneficiation, mid-end tungsten and molybdenum smelting and powder production, and downstream deep-processed applications and recycling, such as hard alloys, tungsten and molybdenum wire products, and cutting tools. With the continuous expansion of downstream deep-processing scale, factors like R&D technology, product quality, and market development capabilities have become more critical to profitability than raw material costs."The company will further leverage the synergistic advantages of its entire industry chain, adopting measures such as optimizing product and customer structures, reducing internal costs, and improving processes to enhance product profitability and mitigate the impact of fluctuations in raw material prices. According to the "Xiamen Tungsten 2023 Q1 Report", in Q1 2025, the company's tungsten and molybdenum business generated operating revenue of 4.054 billion yuan.

Xiamen Tungsten previously disclosed its Q1 2025 report, stating that in Q1 this year, the company achieved a total operating revenue of 8.376 billion yuan, up 1.29% YoY; net profit attributable to shareholders was 391 million yuan, down 8.46% YoY; net profit excluding non-recurring items was 367 million yuan, up 22.08% YoY; net cash flow from operating activities was -376 million yuan, compared to 569 million yuan in the same period last year. During the reporting period, Xiamen Tungsten's basic earnings per share were 0.2463 yuan, and the weighted average return on net assets was 2.43%.

A research report by Huayuan Securities commenting on Xiamen Tungsten's performance indicated the following: Tungsten and molybdenum business: profitability declined in Q1 2025, possibly due to a decrease in demand for PV tungsten wires, leading the company to reduce prices to maintain market share. Rare earth business: production and sales of magnetic materials increased, with profitability improving both YoY and QoQ in Q1 2025. Energy new materials business: sales of LCO surged, and profitability improved in Q1 2025. As a materials platform enterprise, the company has achieved a strategic layout across three major businesses: tungsten and molybdenum, rare earths, and cathode materials. The company's performance is expected to benefit from rising tungsten prices and the favorable market conditions for LCO. Risk warnings: significant decline in demand for tungsten wires; significant decline in rare earth prices; and lower-than-expected demand for cathode materials.

A research report by Minsheng Securities commenting on Xiamen Tungsten pointed out the following: Tungsten and molybdenum segment: rising tungsten prices boosted mine profits, and PV tungsten wires saw rapid sales growth. 1) In 2024, the company's tungsten and molybdenum business achieved a total profit of 2.525 billion yuan, up 7.55% YoY. 2) PV tungsten wires saw rapid sales growth, reaching 107 billion meters in 2024, up 41% YoY. The substitution of PV tungsten wires for high-carbon steel wires is a major trend. Xiamen Honglu, a subsidiary, achieved a net profit of 942 million yuan, up 13.12% YoY. 3) Tungsten prices remained strong, with the price of tungsten concentrate reaching approximately 136,900 yuan/mt in 2024, up 14.27% YoY, boosting mine profits. Ninghua Xingluokeng, Duchang Jinding, and Luoyang Yulu collectively achieved a net profit attributable to shareholders of 630 million yuan, up 24.18% YoY. Energy new materials segment: sales increased YoY in 2024, but profitability was under pressure. 1) In 2024, the company's energy new materials business achieved a profit of 508 million yuan, down 9.08% YoY. 2) In 2024, the company's LCO products benefited from the recovery of the 3C industry and the continuous sales growth of the new 4.5V high-voltage LCO product. Annual sales reached 46,200 mt, up 33.52% YoY; sales of ternary cathode materials reached 51,400 mt, up 37.45% YoY. However, due to the decline in raw material prices and intensified market competition, revenue and profitability in the energy new materials segment declined YoY. Rare Earths Segment: In 2024, the smelting and separation businesses of Longyan Rare Earths Co., Ltd. and Jinlong Rare Earths Co., Ltd., subsidiaries, will no longer be consolidated. The optimization of magnetic material structure has driven profit recovery in the segment. 1) In 2024, the company's rare earths business achieved a total profit of RMB 241 million, up 67.44% YoY. 2) In 2024, the company's magnetic material sales increased by 16% YoY. Due to the increased market expansion efforts in the NEV market for magnetic material products, the optimization of order structure, the improvement of capacity utilization rate, and the promotion of internal cost reduction, sales and profits have increased significantly YoY. Rare earth metal products have seen a decline in revenue and profits YoY due to the impact of falling prices. 3) Due to the integration with China Rare Earths Group, the smelting and separation businesses of Longyan Rare Earths Co., Ltd. and Jinlong Rare Earths Co., Ltd., former subsidiaries, will no longer be included in the consolidated financial statements in 2024. Tungsten prices remained stable MoM in 25Q1, while PV demand slowed slightly. 1) Tungsten prices remained stable, with the 25Q1 tungsten concentrate price at approximately RMB 143,000/mt, up 0.50% MoM. The demand for PV tungsten wire slowed slightly, with 25Q1 fine tungsten wire sales reaching 32.5 billion meters, down 5% YoY. Meanwhile, to accelerate the penetration of tungsten wire, the company further reduced the price of PV tungsten wire, resulting in a 28% YoY decline in sales revenue. The tungsten and molybdenum segment achieved a total profit of RMB 528 million in 25Q1, down 2.35% YoY. 2) In the new energy materials segment, LCO shipments increased significantly YoY. In 25Q1, LCO product sales reached 12,300 mt, up 47% YoY, and the segment achieved a total profit of RMB 124 million in 25Q1, up 8.52% MoM. 3) In the rare earths segment, a total profit of RMB 66 million was achieved in 25Q1, up 65.10% YoY. This was mainly due to a 49% YoY increase in magnetic material sales and a 35% YoY increase in operating revenue. Risk warnings: Risks of economic fluctuations affecting demand and prices, raw material risks, and projects not meeting expectations, etc.