ZGXT(SZ:000831) Guolian Securities·2024-02-22 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 30.45 CNY based on a 90 times PE for 2024 [4]. Core Views - The company is the only listed platform of China Rare Earth Group and is a leader in the medium and heavy rare earth sector, with a significant share of national mining quotas [1]. - The acquisition of a 94.67% stake in Zhongxi Hunan is expected to enhance the company's net profit, with projected net profits from this asset reaching 2.40 million CNY in 2023 and gradually increasing to 1.89 million CNY by 2026 [2]. - The supply-demand dynamics in the rare earth industry are expected to improve in 2024, with a forecasted increase in mining and separation quotas, leading to a potential rebound in rare earth prices [3]. Summary by Sections Company Overview - The company primarily engages in the production and operation of rare earth oxides and provides technology research and consulting services. In 2023, it accounted for 28.0% of the national rare earth mining quota, with medium and heavy rare earth quotas at 67.9% and 24.5%, respectively [1]. Financial Performance - The company’s projected net profits for 2023, 2024, and 2025 are 216 million CNY, 359 million CNY, and 433 million CNY, respectively, with an EPS of 0.20 CNY, 0.34 CNY, and 0.41 CNY [4]. - Revenue is expected to grow from 3,882 million CNY in 2023 to 4,278 million CNY by 2025, with a CAGR of 1.34% over three years [4]. Market Outlook - The Ministry of Industry and Information Technology has set the first batch of rare earth mining and separation quotas for 2024 at 135,000 tons and 127,000 tons, respectively, indicating a year-on-year growth of 12.5% and 10.4% [3]. - The supply growth in the rare earth sector is anticipated to slow down while demand remains robust, suggesting a favorable shift in the supply-demand balance that could lead to price recovery [3].