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<Research> BofAS Initiates Buy Rating on JL MAG RARE-EARTH (06680.HK) with TP of HKD24
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BofAS released a research report, initiating coverage on JL MAG RARE-EARTH (06680.HK) H-shares and A-shares, both with a Buy rating. The target price for H-shares is set at HKD24, while the target price for JL MAG RARE-EARTH (300748.SZ) A-shares is RMB36. The firm is optimistic about the company's market expansion potential driven by new energy heavy trucks and humanoid robots, stable upstream raw material supply, high customer loyalty, rapid market share growth, and current attractive valuation. The firm highlighted that JL MAG RARE-EARTH, as a leading global producer of high-performance NdFeB permanent magnet materials, secures raw material supply through long-term contracts with China's two major rare earth suppliers at prices approximately 10% below spot rates. The high-performance magnet industry has high technical barriers and long certification cycles. Once a customer becomes an approved supplier, they typically sign long-term contracts and co-develop products with downstream partners. The company has established long-term partnerships with leading global electric vehicle and humanoid robot manufacturers. BofAS forecasts a compound annual growth rate of 9% for global high-performance magnet material demand between 2025 and 2028. Although the growth in new energy vehicle sales may slow, the magnet material usage per vehicle will continue to increase due to multi-motor configurations. New energy heavy trucks benefit from policy support, with each vehicle using about three times the magnet material of a typical electric vehicle. In terms of humanoid robots, the firm's industrial team predicts global shipments will reach 1.2 million units by 2030 and 10 million units by 2035. As the degree of freedom increases, the actuator and magnet material usage per robot will also rise. The firm expects JL MAG RARE-EARTH's market share to increase from 19% last year to 25% by 2028, with net profit forecasts for 2026 and 2027 growing by 30% and 44%, respectively. The H-share target price is based on a discounted cash flow model with a weighted average cost of capital of 8.5% and a terminal growth rate of 4%. The A-share target price is calculated with a 73% A/H premium. The current H-share price corresponds to a forecast P/E ratio of about 21 times for 2026-2027, while the target price corresponds to a forecast P/E ratio of about 27 times, which is attractive compared to the 59 times and 40 times for humanoid robot and electric vehicle component peers. (ec/da) Auto-translated by third-party software This translation was auto-generated by third-party software. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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