China Neodymium Permanent Magnets

Investment Strategy of China Rare Earth Permanent Magnet Industry in Q4 2014: Reduction of Barriers of Market at Home and Abroad Driving Growth of Magnet Industry 

Reduction of neodymium magnets export-monopolization promotes real growth of export. 
Neodymium iron boron is a product of high technology content, whose core technology has been being monopolized by Japan. With rapid development of NdFeB permanent magnet technology in domestic, more and more voice of manufacturers can be heard, which brings breakthrough of barriers and growth of trade export. But the key problem which needs final resolution is technological progress. Only in this way can it bring effective export growth.

Elimination of local barriers of new energy cars has beneficial effect on long-term growth. 
Due to the huge market demand, new energy cars in domestic have rapid development trend worldwide. With the open-up of new energy car category in China, new energy cars will have full competition nationwide, which leads to a health and long-term development.

The growth of wind power equipment promotes growth of permanent magnet industry.
Wind power equipment covers about 30% demand of neodymium magnets, whose growth trend has definitely impacted by policy. Due to impact of upgrading consumption, the growth trend will keep fast, stably promoting demand of magnet industry.

Estimated premium rate of rare earth permanent magnet keeps continuous fluctuation at a high-level. 
In the first half of this year, PE valuation of rare earth magnet industry, comparing with premium rate of Hushen 300 index, has a continuous rise, even hitting new highs. The strong subsequent rising potential of the whole industry, after going through the fluctuation at present, will keep stable growth in the long run.

Investment Advice

In the next six month, rare earth magnet maintains overweight rating. 
There are reasons for maintaining permanent magnet overweight rating. First, government has clear attitude toward eliminating or reducing barriers of industry in domestic and abroad. With full and fair competitive environment, technology at home improves rapidly, bringing health and efficient industrialization. Therefore, new energy cars can has long-term and continuous stimulus for permanent magnetic industry. Second, with mature technology of wind power equipment, government holds clear goals for its growth, and it has a great pulling effect. With the economic transformation, the demand of upgrading consumption of energy-saving elevator, household electrical appliance and information equipment will keep continue. But its process will be slow; therefore, its effect on permanent magnets industry will be stable. Third, during the whole process of economic structure transformation, consumption will continuously upgrade, and the worst stage of weak consumption will gradually move away. So magnet industry has bright prospect with short-term rise or fluctuation.

China Rare Earth Magnet Limited
Tags: Permanent Magnet, China Magnet, Rare Earth Magnet, Neodymium Magnet