(Yicai) Jan. 21 -- JL Mag Rare-Earth is planning to spend CNY1 billion (USD143.6 million) to construct a new factory for high-performance rare earth permanent magnetic materials to enable the Chinese producer of rare-earth magnetic materials to better meet growing demand from emerging sectors such as humanoid robotics and new energy vehicles.

The factory, which will be located in Baotou, Inner Mongolia Autonomous Region, will have an annual production capacity of 20,000 tons of rare earth magnetic materials, JL Mag said yesterday. This will boost the firm’s total production capacity by 50 percent to 60,000 tons a year. Construction is expected to span two years.

Despite logging record high production and sales last year, a big drop in the price of rare earth raw materials has squeezed JL Mag’s profit margins. The firm is bracing for a dive in net profit of between 42 percent and 52 percent last year from the year before to between CNY271 million (USD37 million) and CNY327 million (USD37 million), JL Mag said in its earnings forecast for 2024.

The disappointing projection dragged down JL Mag’s share price both on the mainland and in Hong Kong today. JL Mag’s shares in Shenzhen [SHE:300748] closed down 2.4 percent at CNY19.18 (USD2.63). Earlier in the day it sank 5.6 percent to CNY18.55. While in Hong Kong, its stock [HKG:6680] ended the day down 5.4 percent at HKD8.16 (USD1). Earlier in the day it plunged 7.3 percent to HKD8.01.

JL Mag is based in Ganzhou, eastern Jiangxi province, which is an area rich in heavy rare earth resources. The firm specializes in the research, development, processing and sales of high-performance neodymium-iron-boron permanent magnets, magnetic components and the recycling of rare earth permanent magnetic materials. Its products are mainly used in NEVs, permanent magnet wind motors and energy-saving inverter air conditioners.

JL Mag’s revenue from its electric car and auto parts clients accounted for 47 percent of its total income in the first half at CNY1.6 billion (USD218 million), according to the company's latest semi-annual report.

Earnings from the variable frequency air conditioner industry amounted to CNY856 million (USD117 million), while income from its wind power business segment was CNY209 million (USD29 million), the report said. The company is actively expanding its customer base in the humanoid robotics market.

JL Mag counts eight out of the world’s top 10 manufacturers of variable frequency air conditioning compressors and five of the 10 biggest wind turbine manufacturers among its clients, the report said.

Editor: Kim Taylor