Bank of America Securities: First assigned a "buy" rating to Jl Mag Rare-Earth (06680) with a target price of HKD 24.

Bank of America Securities released a research report stating that it is initiating coverage on Jl Mag Rare-Earth (06680) H shares and A shares for the first time, giving each a "buy" rating. The target price for H shares is 24 Hong Kong dollars, while the target price for Jl Mag Rare-Earth (300748.SZ) A shares is 36 Chinese yuan. The bank is optimistic about the company's market expansion potential driven by new energy heavy trucks and Siasun Robot & Automation, stable upstream raw material supply, high customer loyalty, rapid market share growth, and the current valuation not being expensive. The bank pointed out that Jl Mag Rare-Earth is a global leading producer of high-performance neodymium-iron-boron permanent magnet materials. By signing long-term contracts with two major rare earth suppliers in China, the company locks in raw material supply at a price about 10% lower than spot prices. The high-performance magnetic material industry has high technological barriers and long certification cycles. Once a customer becomes an approved supplier, they typically sign long-term contracts and develop products together with downstream partners. The company has established long-term partnerships with leading electric vehicle and Siasun Robot & Automation manufacturers globally. Bank of America Securities predicts a compound annual growth rate of 9% for global demand for high-performance magnetic materials from 2025 to 2028. Although the growth in sales of new energy vehicles may slow down, the amount of magnetic materials per vehicle will continue to increase due to multiple motor configurations. Heavy-duty electric trucks benefit from policy support, with each vehicle using about three times the amount of magnetic materials as a regular electric car. As for Siasun Robot & Automation, the bank's industrial team predicts global shipments of 1.2 million units in 2030 and 10 million units in 2035. As the degree of freedom increases, the amount of actuators and magnetic materials required per Siasun Robot & Automation will also increase. The bank expects Jl Mag Rare-Earth's market share to increase from 19% in the previous year to 25% in 2028, with net profit forecasts for 2026 and 2027 increasing by 30% and 44% respectively. The target price for H shares is based on a discounted cash flow model valuation with a weighted average cost of capital of 8.5% and a terminal growth rate of 4%, while the target price for A shares is calculated based on a 73% A/H premium. The current price of H shares 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 Siasun Robot & Automation and electric vehicle components industry peers with P/E ratios of 59 times and 40 times, respectively.