JL MAG Rare-Earth Co., Ltd. (“JL MAG” or the “Company”, together with its subsidiaries, the “Group”, HKEX: 6680; SZSE: 300748), a leading producer of high-performance rare earth permanent magnets (“REPMs”) in China, successfully listed its H shares on the Main Board of The Stock Exchange of Hong Kong Limited on 14 January 2022, making the Company the first high-performance REPM producer with dual listings of A-shares and H-shares in the world. The Company is pleased to announce its annual results for the year ended 31 December 2021 (“2021” or the “Reporting Period”) today.
Financial Review
In 2021, JL MAG continued to adhere to the core value of “Customer Orientation and Value Co-creation” and implement its corporate mission of “Employing rare earth to create better life”. During the Reporting Period, guided by the development strategy formulated by the Board of the Directors, the Company has actively dealt with the new challenges brought by the complex macro environment and achieved substantial growth in operating results. The production and sales volume of high-performance REPMs reached a record high.
During the Reporting Period, revenue of the Company amounted to RMB4.08 billion, up by 68.78% year-on-year. Profit for the year attributable to owners of the parent reached RMB 453 million, up by 85.37% year-on-year. Weighted ROE reached 23.10%, surged by 5.98 percentage points year-on-year. Basic and diluted earnings per share amounted to RMB0.65, surged by 80.56% year-on-year. The outstanding business performance of the Company replied on the significant growth in the production and sales volume of high-performance REPMs. In 2021, the total production volume of high-performance REPMs reached 10,325 tonnes. Among which, the production volume of high-performance REPMs based on GBD technology was 6,064 tonnes, representing a year-on-year growth of 47.51%, and accounted for 58.73% of the total production volume of high-performance REPMs which went up by 16 percentage points year-over-year. The production volume of ultra-high-grade products was 3,437 tonnes and accounted for 56.68% of the total production volume of high performance REPMs based on GBD technology.
In order to further strengthen its competitive advantage in production technology, the Company’s R&D investment in 2021 amounted to RMB 160 million, up by 55.23% year-on-year, and accounted for 3.93% of the total revenue. Leveraged on its outstanding R&D results, a cooperation project led by the Company was awarded the “Rare Earth Science and Technology Award – First Prize of Scientific and Technological Progress” during the Reporting Period.
JL MAG has been balancing the interests of shareholders and the future development of the Company, and striving to share the fruits of the Company’s development with shareholders on the basis of ensuring the long-term development of the Company. The Board of Directors of the Company has resolved to recommend the declaration of a final dividend of RMB2.50 (tax inclusive) for every 10 Shares, or RMB209.1 million in aggregate for the year ended December 31 2021, accounting for 46.14% of the profit for the year attributable to owners of the parent in 2021.
Continue to be a leader in three key downstream sectors, maintaining in-depth cooperation with top player customers
During the Reporting Period, the Company further solidified its leadership in the new energy vehicles (“NEVs”) and automotive parts sector, energy-saving variable frequency air conditioners (“VFACs”) sector and wind power sector. For NEVs and automotive parts sector, the Company’s products were used for the production of drive motors for eight of the top ten NEV producers in the world in 2021. Its key downstream customers and end-users include Tesla, BYD, United Automotive Electronic Systems Co., Ltd., Nidec Corporation, SAIC Motor, NIO, Li Auto Inc., Bosch Group, Volkswagen, General Motors and other top-tier enterprises. In 2021, the Company’s revenue from NEVs and automotive parts sector amounted to RMB 1.05 billion, up by 222.7% year-on-year. Sales volume of magnetic steel products for NEV drive motors was sufficient to equip approximately 1.24 million passenger NEVs in 2021, facilitating to reduce carbon emissions by approximately 2.56 million tonnes/year.
For energy-saving VFACs sector, JL MAG has maintained good cooperative relationships with the world’s top five VFAC compressor manufacturers for years. The Company’s key downstream customers and end-users include Midea, Gree, Shanghai Highly, Mitsubishi Electric and other well-known brands. In 2021, the Company’s revenue from energy-saving VFACs sector amounted to RMB1.40 billion, up by 59.4% year-on-year. Sales volume of magnetic steel products for energy-saving VFACs was sufficient to equip approximately 48.50 million air conditioner compressors in 2021, facilitating to reduce carbon emissions by approximately 17.55 million tonnes/year.
For wind power sector, four of the top five wind power generator manufacturers in the world are JL MAG’s customers. The Company’s key downstream customers and end-users include Goldwind Technology, Siemens Gamesa and other major players in the industry. In 2021, the Company’s revenue from wind power sector amounted to RMB887 million. Sales volume of magnetic steel products for wind power sector was sufficient to equip wind turbine generators with an approximate aggregate installed capacity of 8.65GW, facilitating to reduce carbon emissions by approximately 14.33 million tonnes/year.
In 2021, the revenue from three key downstream sectors accounted for 81.81% of the total revenue, facilitating to reduce carbon emissions by approximately 34.44 million tonnes/year in total.
Actively respond to the national goals of carbon peak and carbon neutrality, facilitating the world to move towards sustainable development
JL MAG is committed to taking on corporate responsibilities and facilitating the world to achieve the strategic goal of carbon neutrality. The Company has been facilitating the world to reduce carbon emission through its business layout and innovation in products and technology. It also planned to join hands with Goldwind Technology to develop a green power program, including the construction of photovoltaic power plants in the idle areas of the Company’s production sites with no more than 15 MW (including Ganzhou Plant, Baotou Plant, Ningbo Plant and etc.).
With its outstanding performance in the field of carbon reduction, the Company was awarded the “Emerging Power of China Carbon Company Award” by the 1st Sina Finance China Carbon Company.
Fully grasp the strategic opportunity period of upward development of the industry with strategic expansion of production capacity and effective business strategy
With the accelerated global transition to green and low-carbon economy, the downstream demand for high-performance REPMs continues to grow rapidly. In order to capture the tremendous market demand, JL MAG has strategically expanded its production capacity. The Ganzhou plant, where the Company’s headquarters is located, is the largest single plant in China in terms of high-performance REPM production capacity with an annual production capacity of 15,000 tonnes of blanks. Meanwhile, the Company continues to optimize its capacity layout by building production bases in Baotou and Ningbo. Currently, the Company’s high-performance REPM production base in Baotou has been put into operation. The Baotou project is expected to reach full production capacity in the second quarter in 2022 and it will have an annual production capacity of 8,000 tonnes of high-performance REPMs, thereby making the Company’s annual production capacity of blanks to reach 23,000 tonnes per annum in 2022.
Moreover, the Company has invested to construct a project in Ningbo with an annual production capacity of 3,000 tonnes of high-end magnetic materials and 100 million sets of components. The construction of the project has been commenced. The production base is expected to complete the construction and put into operation in 2023. The Company has also proposed to construct a production base in Ganzhou for the production of magnetic materials used for highly efficient and energy-saving motors with an annual production capacity of 2,000 tonnes. In addition, the Company has proposed to construct a high-performance REPM production base (Phase II) in Baotou with an annual production capacity of 12,000 tonnes. Considering the aforementioned capacity expansion plans, it is expected that the Company will achieve an annual production capacity of 40,000 tonnes of high-performance NdFeB PM blanks by 2025.
Apart from capacity expansion, the Company plans to further strengthen its R&D efforts to improve its production technology and diversify its current product portfolio, introduce brand-new high-performance products and technology to timely respond to customers’ demands for upgraded products as well as promoting the cooperation with top-tier customers. Meanwhile, the Company will increase its R&D investment to further reduce the use of medium and heavy rare earth in the production of high-performance NdFeB PMs with wider range of applications, to ensure product quality while increasing operational efficiency.
In order to fully grasp the strategic opportunity period of upward development of the industry, the Company will actively expand its global business footprint with targeted business deployment in overseas market. It will focus on building overseas technology exchange platform, sales platform and logistics services to extend its global presence to more regions and countries and increase its global market share.
JL MAG will continue to adhere to the philosophy of green development while having business expansion. The Company will not only facilitate the pursuit of carbon peak and carbon neutrality in China by providing REPMs, but also better manage its environmental, social and climate-related risks and aim to reduce its greenhouse emissions and resource consumption in the foreseeable future. The Company has established a clear carbon reduction target, aiming to reduce its emission/consumption per unit by an average of 5% to 10% on an annual basis in the future through the increasing use of green energy and recycling of raw materials, thereby achieving its long-term goal of carbon neutrality and realizing its corporate mission of “Employing rare earth to create better life”.