FAST NEWS: Rising Rare Earth Prices Hit JL Mag’s Margins

The latest: High-performance rare earth materials producer JL Mag Rare-Earth Co. Ltd. (6680.HK; 300748.SZ) announced on Wednesday its revenue rose 82.7% to 3.3 billion yuan ($480 million) in the first half of the year, with its net profit up 110.5% to 464 million yuan.

Looking up: The company’s revenue from its new energy vehicles and auto parts categories reached 1.06 billion yuan in the period, a significant increase of 233.8% year-on-year. It said its products have been adopted by eight of the world’s top 10 new energy vehicle manufacturers.

Take Note: A significant increase in rare earth raw material prices caused the company’s gross margin to fall by 4.1 percentage points in the first half of the year to 20.5% from 24.6% a year earlier.

Digging Deeper: JL Mag is a state-owned producer of high-performance rare earth permanent magnetic materials. It was listed in Shenzhen in 2018 and completed its Hong Kong IPO early this year, with a “dual primary listing” status on both exchanges. The company’s neodymium iron boron permanent magnetic materials are used in new energy vehicles, wind turbine generators and energy-saving inverter air conditioners. According to data cited in its prospectus, JL Mag ranks first in the world with a market share of about 14.5% in the production of high-performance rare-earth permanent magnetic materials.

Market Reaction: The Hong Kong stock market was closed on Thursday morning due to a typhoon, so trading in JL Mag’s Hong Kong shares was suspended. The stock rose 1.1% to HK$32.5 after the market resumed in the afternoon. Its Shenzhen-listed shares closed up 0.7% to 38.5 yuan at the midday break, in the middle of their 52-week range.

Translation by Jony Ho

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