CNRE(SH:600111) HTSC·2025-04-30 02:05Investment Rating - The investment rating for the company is maintained as "Accumulate" with a target price of RMB 26.59 [7][8]. Core Views - The company achieved a revenue of RMB 32.966 billion in 2024, a year-on-year decrease of 1.58%, and a net profit attributable to shareholders of RMB 1.004 billion, down 57.64% year-on-year. However, Q4 2024 showed a revenue increase of 33.04% year-on-year [1][2]. - In Q1 2025, the company reported a revenue of RMB 9.287 billion, representing a year-on-year increase of 61.19%, and a net profit of RMB 431 million, up 727.30% year-on-year, indicating a market recovery in the rare earth industry [1][2]. - The report suggests that the rare earth industry may be at an inflection point, with supply constraints and improving downstream demand expected to enhance the supply-demand balance in 2025 [3][4]. Summary by Sections Financial Performance - In 2024, the company's production of rare earth oxides, salts, metals, and magnetic materials decreased by 7.26%, 1.6%, increased by 19.84%, and 17.72% respectively. The overall gross margin declined due to falling rare earth prices [2]. - The company recorded an asset impairment of RMB 357 million in 2024, impacting performance, but did not incur such impairments in Q1 2025 [2]. Supply and Demand Outlook - The report indicates that rare earth prices approached the cost line for some high-cost mines by Q3 2024, establishing a bottom for the industry. Supply constraints are evident due to reduced domestic quotas and disruptions in overseas supply [3]. - The report anticipates a potential improvement in the supply-demand relationship in 2025, with a projected balance of -5.8% for global praseodymium-neodymium oxide supply and demand [3]. Profit Forecast and Valuation - The company’s EPS is projected to be RMB 0.52, 0.85, and 1.13 for 2025, 2026, and 2027 respectively, reflecting a downward adjustment in price assumptions for praseodymium-neodymium oxide [4]. - The target price of RMB 26.59 is based on a PE ratio of 51.13 for 2025, aligning with the average PE of comparable companies [4][12].