(Yicai Global) July 5 -- Zhongke Magnetic Industry’s shares soared by the daily trading limit after the Chinese firm said it plans to invest CNY2 billion (USD277 million) to hike its capacity to turn out rare-earth permanent magnet materials.

Zhongke Magnetic [SHE: 301141] soared 20 percent to end today at CNY53.28 (USD7.36). The stock has gained nearly 30 percent since the Dongyang-based firm listed in Shenzhen in early April.

Zhongke Magnetic signed an investment deal with a development zone in Dongyang in China’s eastern Zhejiang province to build a plant with an annual production capacity of 6,000 tons of high-performance neodymium magnet materials, 20,000 tons of magnetic motor tiles, and 1,500 tons of bonded magnets, it said late yesterday.

The aim of the capacity expansion plan is for Zhongke Magnetic to become “the world’s leading permanent magnet material application solution provider for the consumer electronics and energy-saving home appliance industries,” the company noted.

NdFeB magnets are high-performance permanent rare-earth magnets used in the electronics industry, machinery production, and instrumentation. Motor magnetic tiles are key motor parts. Made of magnetic material powder, bonded magnets have relatively lower performance and production costs than magnets obtained through the sintering or casting process.

Zhongke Magnetic said in its listing prospectus in March that it would use CNY245 million (USD34 million) of the proceeds of the initial public offering to build a plant in Dongyang with an annual production capacity of 6,000 tons of magnetic motor tiles and 1,000 tons of NdFeB magnets.

Given the firm’s guaranteed supply of upstream raw materials and the expansion of its downstream sales channels, Zhongke Magnetic decided that the plant announced in March would become the first phase of the newest, largest project announced yesterday.

Once the project is completed and fully operational, Zhongke Magnetic will have a designated annual production capacity of 29,500 tons of permanent magnetic materials.

Zhongke Magnetic’s main clients are electroacoustic device and permanent magnet motor makers. Its products are mostly used by well-known consumer electronics and energy-saving home appliances brands such as Samsung, Harman International, Sony, Huawei Technologies, Midea Group, and Gree Electric Appliances, according to the IPO prospectus.

Editor: Futura Costaglione