SHRC(SH:600392) Xin Lang Cai Jing·2025-04-25 06:27Core Viewpoint - The company reported a significant decline in revenue and net profit for 2024, primarily due to lower-than-expected rebound in rare earth prices, but is expected to benefit from a recovery in prices and overseas resource investments [1][4]. Financial Performance - In 2024, the company achieved revenue of 11.371 billion yuan, down 36.39% year-on-year, and a net profit of 207 million yuan, down 37.73% year-on-year, which was below the consensus estimate of 529 million yuan [1]. - The fourth quarter revenue was 3.130 billion yuan, down 34.39% year-on-year but up 11.64% quarter-on-quarter, with a net profit of 114 million yuan, down 34.5% year-on-year and down 29.16% quarter-on-quarter [1]. - The company's gross profit improved quarterly throughout 2024, with gross profits of 3 million, 77 million, 224 million, and 291 million yuan in Q1 to Q4 respectively [1]. Production and Pricing - In 2024, the production of rare earth oxides, metals, and salts increased by 13.63%, 36.52%, and decreased by 42.46% year-on-year respectively, while the rare earth price index fell by 26.1% [1]. - The company recorded a year-on-year net profit decline of 40.9% due to the drop in rare earth prices [1]. Strategic Initiatives - The company is actively investing in overseas resources to enhance raw material self-sufficiency, including a partnership with Peak Company for the Ngualla project, expected to produce 18,000 tons of rare earth concentrate annually starting in early 2026 [2]. - In the first half of 2024, the company acquired Strandline Resources and Jiacheng Mining, which have heavy mineral sand projects in Tanzania and Madagascar, with the Tanzania project ready for production in the short term [2]. Industry Outlook - The supply-demand relationship for rare earths is expected to improve in 2025, with a projected shortfall of 5.8% and 4.6% for global praseodymium-neodymium oxide supply in 2025 and 2026 respectively [3]. - The domestic control over rare earth resources is strengthening, with new regulations proposed to manage all sources of rare earth minerals [3]. Investment Rating - The company maintains a "buy" rating despite adjusting its production and sales assumptions for 2025-2026 due to lower-than-expected industry recovery, with projected EPS of 0.45, 0.61, and 0.70 yuan for 2025-2027 [4]. - The target price is set at 14.85 yuan based on a PE ratio of 33.0X for 2025, down from a previous estimate of 15.81 yuan [4].