January 14, 2022, the leading company in the rare earth permanent magnet plate$Golden permanent Magnet (300748.SZ) $Listed in Hong Kong stocks, the company has officially become a dual-listed company. The offering price of H shares is HK $33.80 per share and a total of 125 million shares are issued, resulting in a net proceeds of HK $4.05 billion (assuming the over-allotment right has not been exercised).

$Golden permanent Magnet (06680.HK) $It is a high-tech enterprise integrating R & D, production and sales of high-performance NdFeB permanent magnet materials, and is a leading supplier of Applied Materials Inc, the core of new energy and energy conservation and environmental protection in the world. The company's main products are high-performance NdFeB permanent magnet materials, which are the core materials for the production of all kinds of motors, turbines and other parts, and can be widely used in new energy vehicles, wind power generation, household appliances, intelligent manufacturing and other fields.

Double carbon contributes to the continuous improvement of market space.

Under the continuous promotion of the double carbon policy, the development of new energy is in full swing. Rare earth permanent magnet is an important link in the development of new energy, and high-performance NdFeB permanent magnet material is synonymous with high efficiency, energy saving and environmental protection. New energy vehicles, wind power generation and intelligent manufacturing are the main application fields of high-performance magnetic materials. Energy-saving and environment-friendly frequency conversion products are also the mainstream direction of future renewal and iteration of household appliances. The rapid development of these fields has greatly driven the demand for magnetic materials.

According to Frost Sullivan, the consumption of high-performance NdFeB permanent magnet materials in the global new energy vehicle industry has increased from about 1480 tons in 2015 to about 9760 tons in 2020, with a compound annual growth rate of 45.9%. It is expected to reach about 37510 tons in 2025 and a compound annual growth rate of 30.9% from 2020 to 2025. According to IEA data, the global sales of pure electric + hybrid vehicles will reach 23 million in 2025, bringing demand for 70, 000 tons of NdFeB.

Secondly, NdFeB permanent magnet is also the core material of wind turbine. According to GWEC, the installed capacity of the global wind power field will be 112GW by 2025. According to the calculation of 600kg NdFeB required by 1MW, the demand for NdFeB will reach about 40, 000 tons. At present, the installed capacity of wind power in China is about 300 million kilowatts, which has become the main market of high-performance NdFeB magnetic materials.

Third, driven by national policy and the upgrading of the home appliance industry, the permeability of frequency conversion air conditioners will increase from 40% to 90% in the future, and the demand for NdFeB is expected to reach 12000 tons in 2025. At the same time, with the upgrading of 3C products, magnets are widely used in mobile phones, notebook computers and smart speakers. Some institutions predict that the demand for NdFeB in 3C field will be about 3700 tons in 2021 and will reach about 4000 tons in 2025.

The stable demand for resources in the upper reaches of the key links of the card position industry chain continues to expand.

Throughout the rare earth permanent magnet industry chain, Jinli permanent magnet belongs to the middle reaches of the rare earth permanent magnet industry chain, upstream for enterprises that provide light, medium and heavy rare earth raw materials, and downstream for manufacturers using NdFeB permanent magnet materials to manufacture motors and other equipment.

China's rare earth resources located in the upper reaches are far ahead of the world. According to the statistics of the US Geological Survey in 2020, the global rare earth resources reserves are 120 million tons, and China's reserves are 44 million tons, accounting for 37%, ranking first. Jinli permanent Magnet has signed long-term supply agreements with important raw material suppliers such as South rare Earth Group and North rare Earth Group, and reached a long-term and stable cooperative relationship. At the same time, the integrated China rare Earth Group was established in Ganzhou on December 23, and the company is expected to reach deeper and mutually beneficial exchanges and cooperation with the upstream according to local conditions, so as to better transmit the fluctuation of raw material prices downstream. It is worth noting that the 8000 tons of high-performance rare earth permanent magnet material base invested and built by the company in Baotou, Inner Mongolia, the main producing area of light rare earths, is expected to achieve full production in the second quarter of 2022, followed by an annual blank production capacity of 23000 tons of high-performance rare earth permanent magnet materials. Ningbo's "annual output of 3000 tons of high-end magnetic materials and 100 million sets of components" project has started construction and is expected to be completed and put into production in 2023, laying a solid foundation for the company's sustainable development in the future.

In addition, the strong demand of downstream motor manufacturers for high-performance permanent magnet materials promotes the rapid growth of Jinli permanent magnet. On the one hand, the production and sales of new energy vehicles hit record highs in 2021. According to the data, in 2021, the production and sales of new energy vehicles completed 3.545 million and 3.521 million respectively, an increase of 1.6 times over the same period last year, and the market share reached 13.4%, 8 percentage points higher than that of the previous year. It is reported that each new energy vehicle needs to consume about 3 kilograms of NdFeB. If it is calculated according to the 3 million sales of new energy vehicles this year, there will be at least 9000 tons of NdFeB demand for the whole year.

According to the announcement, Jinli permanent Magnet can assemble 1.24 million new energy vehicles this year, with a market share of about 40 per cent. At present, the company is a magnet supplier of drive motors for new energy vehicles such as Tesla, Inc., BYD and United Automotive Electronics. SAIC, NIO Inc. and Li Auto Inc. are all end users of the company. the company has also been a magnet supplier of auto parts for Bosch Group for many years.

According to the Tianfeng Securities report, China's new energy vehicle drive motor market will be about 21.62 billion yuan in 2020. According to the AVIC Securities Research report, the number of driving motors installed in China's new energy vehicles reached 1.154 million in the first half of 2021, which is close to 1.463 million in the whole of last year. Superimposing the increase in the proportion of B-class and C-class electric vehicles equipped with "double motors" in the future, the installed capacity of motors is expected to further increase.

On the other hand, the Ministry of Industry and Information Technology issued the Motor Energy efficiency improvement Plan (2021-2023), proposing to strengthen the development of permanent magnet motors, including promoting the green level of light rare earth permanent magnet materials, promoting frequency conversion permanent magnet motors with energy efficiency of level 2 and above, and encouraging the use of low-speed direct-drive permanent magnet motors and high-speed direct-drive permanent magnet motors. With the further improvement of national requirements for energy efficiency, the promotion of permanent magnet motors is imperative, and it is a rare development opportunity for upstream magnetic manufacturers.

All sections go hand in hand with performance growth that can be expected in the future.

High-efficiency, energy-saving and other environmental requirements continue to stimulate the upgrading of the motor industry, high-performance magnetic materials continue to release new demand. Benefiting from this, the three rare earth permanent magnet listed companies that have disclosed the 2021 performance forecast have all achieved rapid growth in net profit.

On January 4, Jinli permanent Magnet issued a performance forecast for 2021, and the company is expected to achieve revenue of 38.71-4.355 billion yuan in 2021. Among them, the company achieved revenue of 9.53-1.437 billion yuan in the fourth quarter, and the performance of rapid growth drew a perfect full stop for 2021.

The rapid growth is mainly due to the continuous volume of new energy vehicles, the increase in sales of variable frequency air conditioners and the rapid expansion of 3C, intelligent manufacturing, elevators and other new products. According to the performance forecast, Jinli permanent magnet's sales in the field of new energy vehicles this year increased by 220% compared with the same period last year. According to Western Securities estimates, the company's annual sales of magnetic steel in the new energy sector reached 2200,2500 tons, and the average selling price is steadily rising. Next, in 2023, Jinli permanent Magnet will form an annual production capacity of 3000 to 4000 tons of magnetic steel products for new energy vehicles to meet the downstream demand, and the rise in the volume and price of permanent magnet materials will directly open up the second curve of the company's performance growth.

In addition, in the field of energy-saving frequency conversion air conditioners, product shipments in 2021 can assemble 48.5 million air conditioning compressors, with revenue growth of about 60% over the same period last year; wind power generation sector maintained steady growth, and product shipments in 2021 can assemble fans with an installed capacity of 8.65GW.

The company also said it is constantly exploring new profit growth points. At present, the large-scale mass production in 3C field is under way; at the same time, there is also a good growth in business income in the fields of robot and intelligent manufacturing, energy-saving elevators and so on.

Relevant market analysis, the rare earth permanent magnet industry as a whole plate unprecedented prosperity, a large number of downstream demand will continue to force upstream magnetic materials enterprises to expand production. Jinli permanent Magnet's Hong Kong stock offering will continue to increase production capacity to enhance supply-side strength; strengthen R & D capacity to consolidate competition barriers; and look for opportunities for the layout of the industrial chain to continue to contribute to the development of the company. (CIS)