Nomura Initiates JL Mag Rare-Earth (6680.HK) with Buy: Global Leader in Rare Earth Permanent Magnets
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Nomura initiates coverage on JL Mag Rare-Earth (6680.HK) with a Buy rating and a target price of HK$27, implying roughly 40% upside from the closing price of HK$19.30. JL Mag ranks as the world's largest producer of NdFeB rare earth permanent magnet (REPM) materials, accounting for 10% of global REPM shipments in 2025.
The report projects a 12% volume CAGR from 2025 to 2028, driven by gradual capacity ramp-ups in Baotou, with effective blank-magnet capacity expected to reach 60,000 tons annually by 2028. Humanoid robots emerge as a compelling new growth driver, with each unit estimated to consume 3-4 kilograms of REPM, notably higher than the 2.0-2.5 kilograms required per electric vehicle. Leveraging established partnerships with leading EV manufacturers like Tesla, the company is well-positioned to enter the humanoid robot supply chain. By 2030, humanoid robots could contribute 12% of total revenue and 14% of profit.
JL Mag employs cost-plus pricing and maintains long-term supply agreements with major suppliers like China Northern Rare Earth, helping stabilize gross margins at approximately 20% through 2028. Nomura forecasts revenue and net profit CAGRs of 25% and 32%, respectively, from 2025 to 2028. A profit pre-announcement on July 1 indicated 2Q26 net profit growth of 43-85% year-over-year. The HK$27 target price is based on 25 times FY27F earnings of RMB 0.93 per share, in line with historical averages but well below the global peer average of 37 times. Key risks include demand shortfalls, upstream price volatility, and tightening Chinese rare earth export policies.