RNM(SH:600259) Xin Lang Cai Jing·2025-09-01 00:27Core Viewpoint - The company reported a significant decline in revenue for the first half of 2025, but managed to turn a profit in the second quarter, indicating potential recovery in performance [1][2]. Financial Performance - In 1H25, the company achieved revenue of 2.677 billion yuan, a year-on-year decrease of 47.83%, while the net profit attributable to shareholders was 72 million yuan, marking a turnaround from losses [1]. - For 2Q25, revenue was 1.171 billion yuan, down 22.27% quarter-on-quarter and down 65.35% year-on-year; net profit was 25 million yuan, down 46.63% quarter-on-quarter but up 966.46% year-on-year [1]. - The company’s gross profit and gross margin for 2Q25 were 75 million yuan and 6.40%, respectively, reflecting a year-on-year increase of 82.93% and 5.19 percentage points [2]. Market and Operational Insights - The prices of key products such as praseodymium-neodymium oxide, dysprosium oxide, and terbium oxide showed mixed trends in 2Q25, with overall price increases for the company's main products [2]. - The company’s mining operations faced challenges due to adverse weather and geological conditions, leading to lower than expected output [2]. - The company’s investment in its associate company, Dabaoshan, contributed 118 million yuan to its profits, with Dabaoshan reporting a net profit of 295 million yuan [2]. Strategic Developments - The controlling shareholder, Guangdong Rare Earth Group, plans to transfer 18.45% of its shares to China Rare Earth Group, which will increase its direct holding in the company [3]. - The company’s rare earth separation operations saw significant increases in both mining and production volumes, with a 15% increase in mining and a 74% increase in production year-on-year [3]. - The recent implementation of new regulations marks the beginning of supply-side reforms in the rare earth industry, which is expected to enhance pricing and valuation dynamics [3]. Profit Forecast and Valuation - Revenue projections for 2025-2027 are estimated at 6.1 billion, 6.8 billion, and 7.5 billion yuan, with net profits of 262 million, 384 million, and 484 million yuan, respectively [4]. - The expected earnings per share (EPS) for the same period are 0.78, 1.14, and 1.44 yuan, with corresponding price-to-earnings (PE) ratios of 67, 45, and 36 times [4].