ZGXT(000831) SINOLINK SECURITIES·2025-01-27 01:13Investment Rating - The report gives a "Buy" rating for the company, with a target price of 34.98 RMB based on a 20% valuation premium over the average PE ratio of comparable companies [4]. Core Viewpoints - The company is positioned as a leading player in the heavy rare earth sector and serves as a core listed platform for the China Rare Earth Group, with positive operational profit expected in 2024 despite challenges [1][3]. - The implementation of the "Rare Earth Management Regulations" in October 2024 is expected to impose stricter controls on imported ores and secondary resources, potentially benefiting the company [2][22]. - Supply disruptions from Myanmar and the introduction of new resource fees may elevate industry cost curves, impacting overall pricing dynamics [1][26]. Summary by Sections Company Overview - The company, China Rare Earth Group, focuses on the mining, processing, and separation of heavy rare earths, with a strong emphasis on technological development and quality control [11][13]. - It has shown consistent growth in operational scale and financial performance, with a solid asset structure and financial health [13]. Regulatory Environment - The "Rare Earth Management Regulations" will enhance oversight on imported ores and secondary resources, which could lead to a more orderly supply chain and benefit state-owned enterprises [22][25]. Supply Chain Dynamics - The report highlights a significant slowdown in quota growth for rare earths, with only a 6% increase expected in 2024, contrasting with previous years' growth rates above 20% [2][37]. - Demand for rare earths is projected to grow at rates of 9%, 10%, and 11% from 2024 to 2026, driven by sectors like electric vehicles and industrial robotics [2][40]. Financial Projections - Revenue forecasts for 2024, 2025, and 2026 are 2.777 billion, 5.539 billion, and 7.127 billion RMB respectively, with net profits expected to recover to 5.7 million and 8.4 million RMB in 2025 and 2026 [4][7]. - The company anticipates a return to profitability in 2025, with an EPS of 0.53 RMB and 0.79 RMB in 2025 and 2026 respectively [4][7].