ZGXT(SZ:000831) Hua Yuan Zheng Quan·2025-08-05 06:57Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [4][7]. Core Views - The company is positioned as the core listed platform of China Rare Earth Group, with expected growth driven by resource and smelting synergies [6][9]. - The supply side is dominated by China, with a gradual improvement in domestic quota growth, while the demand side is benefiting from the expanding market for high-performance rare earth permanent magnets [6][30]. Summary by Sections Company Overview - The company is controlled by China Rare Earth Group, which holds 28.56% of its shares as of April 24, 2025 [6][13]. - The company’s rare earth production in 2024 is projected to be 2,384 tons of REO, accounting for only 2.93% of the group’s total indicators [6][16]. Financial Forecast and Valuation - Revenue projections for 2025-2027 are estimated at 49.08 billion, 60.68 billion, and 67.76 billion RMB, respectively, with net profits of 3.5 billion, 4.5 billion, and 5.5 billion RMB [5][45]. - The company’s price-to-earnings ratios for the same period are expected to be 124, 96, and 80 times [7][45]. Supply and Demand Dynamics - In 2024, global rare earth production is expected to reach approximately 390,000 tons, with China accounting for about 70% of this output [6][26]. - The demand for high-performance rare earth permanent magnets is projected to grow significantly, driven by sectors such as electric vehicles and robotics [30][33]. Growth Drivers - The company benefits from a complete resource and smelting capacity layout, with core mining resources and smelting subsidiaries contributing to its growth potential [23][24]. - The anticipated recovery in rare earth prices, alongside the expected stabilization of supply and demand, is likely to enhance profitability [39][41].