Core Viewpoint - The new regulations on rare earths in China are expected to significantly impact the global supply chain, leading to price surges and strategic adjustments by international companies [2][3][4]. Group 1: Policy Changes - The "Total Control Management Measures for Rare Earth Products" limits China's rare earth mining quota to 240,000 tons for 2025, a mere 3% increase from 2024, which is below the global demand growth of 6% [3]. - The new policy also tightens the quotas for rare earth smelting and separation, with southern ion-type rare earth smelting capacity utilization capped at below 70% [3]. - Specific quotas for strategic elements like praseodymium, neodymium, dysprosium, and terbium have been introduced, with neodymium supply expected to remain unchanged year-on-year [3]. Group 2: Global Impact - The new regulations have triggered immediate reactions from global companies, with Toyota adjusting its electric vehicle production plans and Siemens initiating strategic reserves due to increased costs for neodymium-iron-boron permanent magnet materials [4]. - The U.S. Raytheon Company has warned that its rare earth inventory for the Patriot missile guidance system will only last for nine months under current conditions [4]. - Despite efforts from companies like Lynas in Australia and MP Materials in the U.S. to ramp up production, it is projected that overseas rare earth capacity will only meet 28% of global demand by 2025 [4]. Group 3: Technological and Economic Implications - The value of rare earths increases significantly through processing, with raw ore valued at approximately 30,000 yuan per ton, while processed permanent materials can reach up to 800,000 yuan, and precision motors can be valued at 12 million yuan [6]. - The U.S. Department of Defense recognizes the strategic importance of rare earths, linking them to the production capabilities of advanced military systems like the F-35 fighter jet [6]. - China is enhancing its rare earth processing technologies, with innovations in green extraction and recycling systems that improve resource utilization rates [6]. Group 4: Future Trends - The rare earth market is expected to evolve into a "three-legged" competition, with China maintaining dominance in heavy rare earth supply, while Western nations accelerate support for projects in Australia, Canada, and India [7]. - Long-term competition will focus on technological alternatives and resource recycling, with projections indicating that by 2030, 30% of global rare earth demand could be met through recycling [7]. - The new policies serve as both a defensive measure and a strategic offensive tool for China, emphasizing the importance of controlling key resources in the context of global industrial competition [7].

Summary of Conference Call on Rare Earth Industry Industry Overview - The rare earth industry is experiencing a tightening supply-demand situation, particularly in China, following the implementation of export controls in April 2025, which has led to a disconnection between domestic and international markets [2][4][7]. Key Points Demand Trends - High-performance neodymium-iron-boron (NdFeB) demand is projected to reach 63% in 2024 and increase to 68% by 2027, driven by sectors such as electric vehicles and robotics [1][2]. - The compound annual growth rate (CAGR) for China's high-performance NdFeB demand from 2020 to 2024 is approximately 25%, with an expected CAGR of around 13% from 2024 to 2027 [1][3]. Supply Dynamics - Domestic rare earth supply is influenced by several factors, including the cessation of exports from the U.S. MP Company and disruptions in imports from Myanmar, which saw an 81% year-on-year decline from January to March 2025 [4][5]. - By June 2025, imports from Myanmar rebounded to 5,600 tons, a 71% year-on-year increase [5]. Price Movements - Since mid-July 2025, the price of praseodymium-neodymium oxide has entered an upward trend, with prices increasing by 27% compared to the beginning of the year [6]. - As of July 22, 2025, the price per ton of praseodymium-neodymium oxide was reported at 478,000 yuan, reflecting a 20% increase since the start of the year [6]. Future Supply and Demand Outlook - The global supply-demand balance for praseodymium-neodymium oxide is expected to remain tight from 2025 to 2027, with domestic conditions improving as demand strengthens and supply tightens [7][9]. - The U.S. Department of Defense's agreement with MP Company, which sets a minimum purchase price of $110 per kilogram, is anticipated to raise the price ceiling for rare earths globally [10]. Investment Recommendations - It is advised to focus on upstream companies with strong resource attributes and growth potential, such as Northern Rare Earth and Guangsheng Nonferrous, as well as leading downstream magnetic material companies involved in humanoid robots and electric vehicles, like Jinli Permanent Magnet and Ningbo Yunsheng [11]. - Attention should also be given to overseas rare earth companies, including MP in the U.S. and Lynas in Australia [11]. Industry Outlook - The rare earth and magnetic material industries are expected to have a positive outlook in the coming years, with stable costs for upstream companies and rapid demand growth for downstream companies [12]. - The demand for high-performance NdFeB is projected to grow at over 13% from 2024 to 2027, supporting higher valuations for these companies [12][13]. Valuation Considerations - Valuation should consider both profit and volume, with upstream rare earth companies benefiting from price increases and downstream magnetic material companies experiencing rapid growth due to the electrification trend [13][14].

Core Viewpoint - The domestic supply and demand for praseodymium and neodymium oxide is expected to gradually tighten, leading to a moderate price increase in the context of a fragmented global rare earth supply and demand situation [1]. Group 1: Demand - The arrival of the downstream procurement peak season, combined with improved exports, is expected to enhance overall domestic magnetic material demand. The demand for high-performance neodymium-iron-boron is projected to grow at a CAGR of 25% from 2020 to 2024 and 13% from 2024 to 2027 [2][6]. - By 2027, the demand for high-performance neodymium-iron-boron is anticipated to account for 68% of the total demand, driven by the rapid development of new energy and energy-saving sectors [7]. - In June, China exported 3,188 tons of magnetic materials, marking a significant month-on-month increase of 157%, which is approximately 70% of the average monthly export volume over the past three years [15]. Group 2: Supply - Domestic rare earth supply is tightening due to a reduction in imports from the U.S. and limited supply increases from other sources. In 2024, domestic mining, Myanmar imports, and U.S. imports are expected to account for 78%, 10%, and 9% of the domestic rare earth supply, respectively [18][19]. - The U.S. MP Materials company announced on April 17 that it would stop exporting rare earth concentrates to China, resulting in zero imports from the U.S. in June [20]. - Myanmar's rare earth imports have rebounded to a three-year high, with 5,600 tons imported in June, but further significant increases are unlikely due to ongoing supply disruptions [21]. Group 3: Outlook - As of July 23, the domestic price of praseodymium and neodymium oxide was reported at 496,000 yuan per ton, reflecting a 25% increase since the beginning of the year and a 10% increase from the highest point in the first half of the year [25]. - The supply-demand balance for praseodymium and neodymium oxide is projected to gradually tighten from 2025 to 2027, with estimated balances of +6,304 tons, +522 tons, and -1,466 tons, representing 7.6%, 0.6%, and -1.6% of demand, respectively [32].

Core Insights - The ongoing competition between China and the United States over rare earth elements (REE) has intensified, with China employing strategic measures to control its supply and protect its technological advantages [5][11][28] Group 1: Strategic Measures - China has implemented a command requiring domestic rare earth experts to surrender their passports, effectively restricting their ability to leave the country and preventing foreign entities from acquiring critical technical knowledge [11][13] - The export volume of rare earth magnets from China has significantly decreased, attributed to stricter approval processes for export licenses, which now require detailed explanations of the intended use and final destination of the products [20][22] Group 2: U.S. Response and Challenges - U.S. officials express concern over the dependency on Chinese rare earths, with statements indicating that achieving independence from this reliance could take at least a generation [15][19] - The U.S. lacks a complete supply chain for rare earths, facing challenges in mining, processing, and production, which complicates efforts to reduce reliance on Chinese supplies [16][17] Group 3: Global Market Dynamics - China dominates the global rare earth market, producing 60% of the world's supply and refining 90% of it, giving it a significant leverage in international trade [16] - The complexity of rare earth separation technology poses a barrier for Western countries attempting to replicate China's capabilities, as they struggle to find experienced personnel and effective operational methods [22][24] Group 4: Implications for National Security - The strategic importance of rare earths is underscored by their critical role in advanced military applications, with potential supply disruptions posing serious risks to national security for countries reliant on these materials [9][18] - The illicit export of rare earths has emerged as a concern, with reports of sophisticated smuggling operations aimed at circumventing Chinese export controls [19][20]

Group 1 - The company has successfully completed its initial public offering (IPO) by issuing 66.07 million shares at a price of 12.30 RMB per share, raising a total of 812.66 million RMB [1] - The funds raised will be used for specific projects, including a high-performance neodymium-iron-boron production project with a total investment of 944.15 million RMB, of which 818.10 million RMB is planned to be funded by the raised capital [2][3] - The company has pre-invested a total of 185.90 million RMB from its own funds into the projects before the IPO funds were available [3][4] Group 2 - The company has established a special account for the management of the raised funds and signed a tripartite supervision agreement with the sponsor and the bank [2] - The company has adjusted the amount of raised funds allocated to projects due to the actual net amount being lower than initially planned, ensuring that the projects will still be implemented without changing the intended use of funds [2][3] - The total issuance costs amounted to 82.32 million RMB, with 10.20 million RMB paid from self-raised funds, while the remaining costs were deducted from the raised funds [4][6] Group 3 - The independent directors and the accounting firm have confirmed that the use of raised funds to replace pre-invested self-raised funds and paid issuance costs complies with relevant regulations and does not harm shareholder interests [6][7] - The sponsor has verified that the necessary legal procedures were followed, and the replacement of funds occurred within six months of the funds being received [7][8]

Core Viewpoint - The report provides a verification of Baotou Tianhe Magnetic Material Technology Co., Ltd.'s use of raised funds to replace self-raised funds previously invested in projects and to cover issuance expenses, confirming compliance with regulatory requirements [2][3][4]. Group 1: Fundraising Overview - The company successfully raised a total of RMB 730,339,590.00 through the issuance of 66.07 million shares at a price of RMB 12.30 per share, with all funds received by December 26, 2024 [4]. - A special account has been established for the management of the raised funds, ensuring dedicated oversight and compliance with regulations [5]. Group 2: Investment Project Details - The raised funds will be allocated to three main projects: 1. Intelligent transformation of high-performance rare earth permanent magnet material production line 2. Upgrading of the high-performance rare earth permanent magnet material R&D center 3. Industrialization project for producing 3,000 tons of high-performance NdFeB for electric vehicles - The total investment for these projects is RMB 944.15 million, with RMB 818.10 million planned to be funded from the raised capital [5]. Group 3: Fund Replacement and Expenses - As of December 31, 2024, the company has pre-invested a total of RMB 570,255,788.55 from self-raised funds into the projects, with RMB 185,896,872.89 specifically for the high-performance NdFeB industrialization project [6]. - The total issuance expenses amounted to RMB 82,321,410.00 (excluding tax), with RMB 10,195,905.66 paid from self-raised funds [6]. - The company plans to replace the pre-invested self-raised funds and issuance expenses with the raised funds, subject to board approval and verification by registered accountants [6].

Core Viewpoint - The company reported a revenue of 6.763 billion yuan for 2024, a year-on-year increase of 1.13%, but the net profit attributable to shareholders was 291 million yuan, down 48.37% year-on-year, which was below expectations [1] Group 1: Financial Performance - In Q4 2024, the company achieved a revenue of 1.749 billion yuan, representing a year-on-year increase of 6.82% and a quarter-on-quarter increase of 5.85% [1] - The company's high-performance neodymium-iron-boron production and sales volumes for 2024 were 21,600 tons and 20,900 tons, respectively, with year-on-year increases of 42.40% and 37.88% [2] - The overall gross margin for 2024 was 11.13%, down 4.94 percentage points year-on-year, while the gross margin for Q4 2024 was 14.28%, up 1.46 percentage points quarter-on-quarter [2] Group 2: Business Development - The company is actively expanding into emerging downstream applications, with the revenue from the new energy vehicle sector reaching 3.314 billion yuan in 2024, a year-on-year increase of 38.62%, accounting for 49% of total revenue [3] - The company has delivered small batches of magnetic components for humanoid robots, leveraging its extensive research and supply experience in the robotics field [3] Group 3: Profit Forecast and Valuation - Due to a weakening competitive landscape in the industry in the second half of 2024, the company has adjusted its gross margin and profit forecasts for 2025-2026, expecting EPS of 0.57 yuan, 0.79 yuan, and 0.81 yuan for 2025-2027, respectively [4] - The target price for the company is set at 24.29 yuan, based on a PE ratio of 42.63 for 2025, reflecting a cautious approach without granting valuation premiums [4]

Investment Rating - The investment rating for the company is "Buy" [7] Core Views - The company achieved a revenue of 6.763 billion RMB in 2024, a year-on-year increase of 1.13%, but the net profit attributable to shareholders was 291 million RMB, down 48.37% year-on-year, which was below expectations [1][4] - The company is expected to see significant demand growth in emerging fields such as humanoid robots, with a potential surge in product demand anticipated in 2025-2026 [1][3] - The company has actively expanded into new downstream applications, with the electric vehicle sector generating 3.314 billion RMB in revenue in 2024, a year-on-year increase of 38.62%, accounting for 49% of total revenue [3] Revenue and Profitability - In Q4 2024, the company reported a revenue of 1.749 billion RMB, a year-on-year increase of 6.82% and a quarter-on-quarter increase of 5.85%, with a net profit of approximately 94.16 million RMB, up 35.62% year-on-year and 21.96% quarter-on-quarter [1][2] - The company's high-performance NdFeB production and sales volumes reached 21,600 tons and 20,900 tons respectively in 2024, representing year-on-year increases of 42.40% and 37.88% [2] - The overall gross margin for 2024 was 11.13%, down 4.94 percentage points year-on-year, while Q4 2024 gross margin improved to 14.28%, up 1.46 percentage points quarter-on-quarter [2] Forecast and Valuation - The company’s EPS for 2025-2027 is projected to be 0.57 RMB, 0.79 RMB, and 0.81 RMB respectively, with a downward adjustment of 16.18% and 7.06% for 2025 and 2026 [4] - The target price for the company is set at 24.29 RMB, with a corresponding target price of 15.90 HKD for H shares, reflecting a 64.37% premium based on the average A/H premium over the last 30 days [4][7]