Gold Power Magnet's Profit Surges by 380% Thanks to Rare Earths!

From smartphone chips to fighter jet radars, high-tech core components depend on rare earth elements. Those who control rare earths hold the key to the global technology industry! Notably, China possesses nearly half of the world’s strategic resource, with 44 million tons of rare earth reserves in 2024, accounting for 48% of the global total and ranking first worldwide. Crucially, China is the only nation with the entire production chain for rare earths; even if other countries mine these minerals, the majority must be shipped to China for processing before being sold back. Starting from the fourth quarter of 2024, rare earth prices began to rise, and further increases were noted for the fourth quarter of 2025. On October 11, Baotou Steel and Northern Rare Earth announced the price of rare earth concentrates for the fourth quarter of 2025 would be set at 26,205 yuan per ton, reflecting a 37% increase from the previous period. This price increase rippled down through the industry chain, affecting everything from rare earth smelting and separation to downstream magnetic material manufacturing, igniting interest throughout the sector. To capitalize on the industry’s growth, the Rare Earth ETF (159713) presents a compelling opportunity. This fund spans key companies across the entire rare earth supply chain, including China Rare Earth, Xiamen Tungsten, and JLMAG. Its comprehensive coverage ensures a simultaneous reflection of the overall prosperity of the rare earth industry, unlike other funds focused narrowly on single segments which might yield less favorable outcomes. JLMAG significantly benefited from this upsurge in rare earth prices, with nearly 90% of its business involving high-performance neodymium-iron-boron magnets utilized in fields such as electric vehicles, wind power, and industrial robotics. As rare earth prices climbed, the cost of high-performance neodymium-iron-boron (such as N45) rose from 150,000 yuan per ton at the end of September 2024 to 220,000 yuan per ton by the end of September 2025, marking an increase of approximately 47%. With rising product prices, the company’s performance naturally surged as well. In the first three quarters of 2025, JLMAG reported revenue of 5.373 billion yuan, a year-on-year increase of 7.16%, and a net profit of 515 million yuan, far exceeding the total for 2024; the non-recurring net profit growth rate skyrocketed to 381.94%. However, not all players are sharing in the industry windfall. Zhenghai Magnetic Material, also engaged in permanent magnet production, saw its net profit fall by 24.39% year-on-year in the first half of 2025, following a dramatic 79.37% drop in 2024. Meanwhile, the revenue of Zhongke Sanhuan continued to decline, down 11.17% year-on-year. When examining key profitability metrics like gross margin and net margin, the disparities become more evident. In the first half of 2025, JLMAG’s gross margin rose to 16.39%, while Zhenghai Magnetic Material and Zhongke Sanhuan continued to see declines; in terms of net margin, JLMAG achieved 8.82%, over 5 percentage points higher than the latter two. By the third quarter of 2025, the company’s profitability further recovered, with a quarterly gross margin of 25.31% and a net margin of 11.51%, returning to the high profit levels of 2020. Many may wonder why JLMAG’s profitability has rebounded so rapidly. The answer lies in its well-established “technology + supply chain + new fields” triple moat, which not only helps it withstand cost pressures but also securely capture incremental opportunities, allowing it to outpace its peers. First, leveraging technology to tackle the “cost + performance” challenge. The core competitiveness of high-performance neodymium-iron-boron is intricately tied to technology. JLMAG has long since tackled this challenge, mastering key technologies such as grain boundary infiltration, granulation, and one-time forming. The critical “grain boundary infiltration technology” has enabled the company to cross the dual barriers of cost and performance. With this technology, JLMAG produces magnets that reduce the use of heavy rare earths like dysprosium and terbium by 50%-70%, saving substantial raw material costs while enhancing magnet performance, achieving peak magnetic energy product levels of 52-57 MGOe, ranking among the industry’s best. Achieving this is due to a continually expanding R&D team. As of 2024, JLMAG employed 921 researchers, surpassing peers such as Inolight and Zhenghai Magnetic Material, and this team facilitates continuous technological innovation. Furthermore, by the first half of 2025, over 90% of the company's magnetic materials produced utilized grain boundary infiltration technology. This indicates that most products benefit from the cost and performance advantages afforded by the technology, providing a solid basis for profitability recovery. Second, the synergy between upstream and downstream supports "scale + orders." Merely having technology is insufficient; amplifying profitability advantages also requires scaling up. In 2024, the company established an annual production capacity of 38,000 tons of rare earth permanent magnet materials, solidifying its position as the global leader. Additionally, a new expansion project commenced in January 2025, with goals to achieve a production capacity of 60,000 tons by 2027. As production capacity rises, unit costs can be further diluted. However, stable capacity expansion necessitates robust assurances from both upstream raw material and downstream market absorption. On the raw material front, JLMAG has established long-term partnerships with Northern Rare Earth and China Rare Earth, with its mid-year report indicating that 70% of its raw material purchases are sourced from these two major groups, ensuring a steady supply of rare earth materials. On the downstream side, the company has broadened its client base extensively, collaborating with all top ten global electric vehicle manufacturers and eight of the top ten variable frequency air conditioning compressor manufacturers, as well as five of the top ten wind turbine manufacturers. The third-quarter report for 2025 explicitly stated that the “fourth quarter has sufficient orders on hand.” With ample raw materials, increased production capacity, and full order books, the certainty of profitability recovery outweighs that of peers. Third, seizing new fields opens up growth opportunities. If strong technology and supply chain collaboration reinforce the foundation, tapping into emerging markets unlocks growth potential, contributing significantly to JLMAG’s rapid recovery in profitability. New sectors such as humanoid robots and the low-altitude economy are driving growing demand for high-performance rare earth permanent magnet materials. Industry forecasts indicate that by 2028, global consumption of high-performance rare earth permanent magnet materials could rise to approximately 230,000 tons. Early on, JLMAG identified this opportunity, establishing a dedicated department for motor rotors for humanoid robots and collaborating with renowned global technology firms to develop magnetic components. By the first three quarters of 2025, the company had already begun small-scale deliveries of its products for humanoid robot motor rotors and low-altitude flying vehicles, providing additional support to its profitability. Not only JLMAG, but the Rare Earth ETF (159713) is also focusing on this emerging market. As a passive fund tracking the rare earth industry, its portfolio naturally includes companies like JLMAG that are seizing opportunities in new sectors, capturing industry growth through a comprehensive supply chain strategy. As of October 21, 2025, the fund’s assets had reached 1.986 billion yuan, growing over 500% since the beginning of the year, reflecting the market's increasing confidence in it. In conclusion, JLMAG's story goes beyond merely riding the wave of rising rare earth prices. By investing early in technology, building strong supply chains, and seizing early opportunities in new markets, it was able to capture the opportunities amid industry fluctuations. For companies, true competitiveness has never been about "waiting for the wind"—it's about honing “wings” before the wind arrives, which may be the key to why JLMAG has outpaced its peers. This analysis does not constitute specific buying or selling advice. The stock market carries risks; invest cautiously. Finally, don’t forget to click the bottom right corner to "gift roses" that leave a lasting fragrance, growing together on the investment journey! Also, be sure to check out the talented short-term trader, Jin Yan, whose guide "Eighteen Techniques of Lifting the Dragon" teaches you step-by-step how to catch market leaders!