Core Viewpoint - Northern Rare Earth received a warning letter from the Inner Mongolia Securities Regulatory Bureau for failing to disclose the occupation of 8.95 million yuan in funds, which will be recorded in the integrity archives of the securities and futures market [1] Company Summary - As of October 13, Northern Rare Earth’s stock price hit the daily limit, with a total market value of 208.7 billion yuan and an annual increase of over 170% [2] - The company expects a net profit attributable to shareholders of 1.51 billion to 1.57 billion yuan for the first three quarters, representing a year-on-year increase of 272.54% to 287.34% [5] - The quarterly net profit for the first three quarters is estimated to be between 430 million and 640 million yuan, showing a trend of growth each quarter [6] - Despite the significant profit increase, this growth rate is considered common in the basic raw materials sector and not particularly outstanding [7] - The company’s profitability has not returned to the historical peak, with net profits exceeding 5 billion yuan in 2021 and 2022 [11] Industry Summary - The rare earth sector saw a 9.49% increase on October 13, leading all popular concept sectors, with several companies, including Northern Rare Earth, reaching their daily limit [3] - The demand for rare earths is expected to improve as the traditional peak season approaches, with supply-demand dynamics potentially remaining favorable [3] - However, the prices of various rare earth products have shown a downward trend, except for a slight increase in dysprosium oxide due to increased procurement activities by leading companies [3] - The overall performance of the rare earth industry appears rational compared to the heated secondary market [3] - The valuation of rare earth stocks has become notably high, with Northern Rare Earth’s stock price reflecting a significant increase, leading to an annualized valuation of approximately 74.97 times based on the latest price [18] - Other rare earth companies also exhibit high valuation levels, with estimates for companies like China Rare Earth and Guangsheng Nonferrous at 177 times and 83 times, respectively [19]

Core Viewpoint - Northern Rare Earth received a warning letter from the Inner Mongolia Securities Regulatory Bureau for failing to disclose the occupation of 8.95 million yuan in funds, which has been recorded in the integrity archives of the securities and futures market [1] Group 1: Market Performance - As of October 13, Northern Rare Earth's stock price hit the daily limit, with a total market value of 208.7 billion yuan and an annual increase of over 170% [1] - The rare earth sector index rose by 9.49% on October 13, leading all popular concept sectors, with several stocks including Baogang Co. and China Rare Earth also hitting the daily limit [4] - The rare earth sector has seen a continuous upward trend since October 9, with the Wind rare earth index increasing by approximately 14% [12] Group 2: Industry Dynamics - Despite the hot secondary market, the rare earth industry remains relatively rational, with prices for various rare earth products, except for dysprosium oxide, showing a downward trend [6] - Baogang Co., which has the world's largest rare earth raw material base, generates 77% of its revenue from steel products, indicating that rare earth products do not significantly impact its overall performance [6] - Northern Rare Earth's net profit for the first three quarters is expected to be between 1.51 billion and 1.57 billion yuan, reflecting a year-on-year increase of 272.54% to 287.34% [7] Group 3: Valuation Concerns - The valuation of rare earth stocks has reached high levels, with Northern Rare Earth's stock price returning to historical highs, despite its profit not reaching previous cycle peaks [10] - The annualized valuation of Northern Rare Earth has risen to approximately 74.97 times, while other companies in the sector also show high valuation levels, such as China Rare Earth at 178 times [15] - The current high valuations in the rare earth sector are uncommon compared to other basic raw material industries, raising concerns about potential obstacles to further stock price increases [15]