Bank of America Securities: Initiate "Buy" rating for Jinli Permanent Magnet with a target price of HKD 24

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Bank of America Securities has released a research report, initiating coverage on Jinniu Permanent Magnet (06680) H shares and A shares, both rated “Buy,” with a target price of HKD 24 for H shares and CNY 36 for Jinniu Permanent Magnet (300748.SZ) A shares. 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 stickiness, rapid market share growth, and the current valuation not being expensive.

The firm noted that Jinniu Permanent Magnet, as a global leader in high-performance neodymium iron boron permanent magnet materials, has secured raw material supply at prices about 10% lower than spot prices by signing long-term contracts with China’s two major rare earth suppliers. The high-performance magnetic materials industry has a high technical barrier and long certification cycles; once a customer becomes an approved supplier, they typically sign long-term contracts and jointly develop products with downstream partners. The company has established long-term cooperative relationships with global leaders in electric vehicles and humanoid robot manufacturing.

Bank of America Securities predicts that the global demand for high-performance magnetic materials will grow at a compound annual growth rate of 9% between 2025 and 2028. Although sales growth of electric vehicles may slow, the amount of magnetic materials used per vehicle will continue to increase due to multi-motor configurations. New energy heavy trucks benefit from policy support, with the material usage per vehicle being about three times that of typical electric vehicles. In the humanoid robot segment, the firm’s industrial team forecasts global shipments to reach 1.2 million and 10 million units in 2030 and 2035, respectively, with the demand for actuators and magnetic materials per robot also increasing as degrees of freedom improve.

The firm expects Jinniu Permanent Magnet’s market share to rise from 19% last year to 25% by 2028, with net profit forecasts growing by 30% and 44% in 2026 and 2027, 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%. The target price for A shares is calculated based on a 73% A/H premium. The current price of H shares corresponds to a forecasted price-to-earnings ratio of about 21 times for 2026 to 2027, while the target price corresponds to a forecasted price-to-earnings ratio of about 27 times, which is attractive compared to the 59 times and 40 times of the peers in humanoid robots and electric vehicle components, respectively.

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Editor: Shi Lijun