China Northern Rare Earth(Group)High-Tech Co.,Ltd. delivered first-quarter 2026 results that significantly exceeded expectations. The company achieved operating revenue of 11.859 billion yuan, a year-on-year increase of 27.69%. Net profit attributable to shareholders of the listed company reached 918 million yuan, surging 113.12% compared to the same period last year.
The core driver behind this strong performance is clear: the average price of major rare earth products, represented by praseodymium-neodymium oxide, rose notably year-on-year during the quarter, leading to a substantial increase in gross profit. Benefiting from sustained demand growth in downstream rare earth permanent magnet materials, the rare earth market showed an overall strengthening trend during the reporting period. As the nation's largest strategic rare earth resource base, the company experienced a powerful synergy between production volume, sales volume, and price, resulting in robust earnings momentum. All profitability indicators showed improvement: total profit reached 1.252 billion yuan, up 82.05% year-on-year. Net profit after deducting non-recurring gains and losses was 883 million yuan, an increase of 103.21%, indicating that the performance improvement is highly dependent on core operations rather than one-off gains. Basic earnings per share jumped to 0.2539 yuan from 0.1191 yuan in the prior-year period. The weighted average return on equity reached 3.65%, an improvement of 1.75 percentage points from the same period last year. Notably, investor Zhang Jianping entered the company's list of top ten circulating shareholders, holding 72.2544 million shares, representing a 2% stake in the total share capital. Based on the quarter-end stock price, the market value of this holding reached 3.445 billion yuan. Currently, Zhang Jianping held shares in four companies in the first quarter: China Northern Rare Earth(Group)High-Tech Co.,Ltd., Dongcai Technology, Western Materials, and Sichuan Gold. Except for Dongcai Technology, which was an increased position, the other three were new additions in the first quarter.
Rare Earth Price Recovery is the Primary Contributor
The fundamental driver of this earnings surge lies in the systematic recovery of rare earth commodity prices. The company explicitly stated in its report that the higher average price of praseodymium-neodymium products year-on-year in the first quarter was the core reason for the improved gross margin. Praseodymium-neodymium oxide, a key raw material for producing neodymium iron boron permanent magnets, sees its price trend closely linked to demand changes in high-growth sectors such as new energy vehicle motors, industrial robots, and wind power generation. From a downstream perspective, end-demand, represented by rare earth permanent magnet materials, showed growth momentum in the first quarter, pulling the overall rare earth market higher. The company's magnetic materials business continued to leverage its production capacity advantages, with supply coverage in the Baotou region exceeding 95% and achieving full coverage of leading magnetic materials enterprises, further enhancing its product pricing power. This structural advantage was fully amplified during the price upcycle.
Profit Structure Behind the "Doubled" Net Profit
Reviewing the income statement, the company's total operating costs for the first quarter were 10.670 billion yuan, a 23.7% increase from 8.628 billion yuan in the same period last year. The rate of cost expansion was lower than the revenue growth rate, directly leading to an improvement in gross margin. Regarding non-recurring items, the total for the period was approximately 343 million yuan, of which gains from changes in fair value contributed 342 million yuan (compared to a loss of 184 million yuan in the same period last year, resulting in a positive year-on-year contribution of about 526 million yuan), primarily stemming from valuation changes in the company's held financial assets at fair value through profit or loss. In contrast, the 103.21% year-on-year increase in net profit after deducting non-recurring items sufficiently demonstrates that the genuine improvement in core profitability does not rely on fluctuations in financial asset values. Administrative expense control was commendable: administrative expenses for the period were 223 million yuan, down approximately 9% from 245 million yuan in the prior-year period. Achieving expense reduction against a backdrop of significant revenue growth indicates a degree of operating leverage.
Operating Cash Flow Turns Negative: The "Lagged Effect" of Tax Payments
The net cash flow from operating activities turning negative is the most perplexing figure in this quarterly report. A breakdown reveals that the company paid various taxes and fees totaling 930 million yuan in the first quarter, a massive 351% increase compared to only 206 million yuan in the same period last year. This single item alone consumed approximately 724 million yuan in cash. The logic behind this discrepancy is that following the profit improvement in 2025, the corresponding tax payments were settled intensively in the first quarter of 2026, creating significant pressure on cash flow. Concurrently, the company's prepayments increased by 150.88% year-on-year, reflecting efforts to build up inventory of upstream raw materials, which also consumed some operating cash. Correspondingly, the net cash flow from financing activities reached 641 million yuan (compared to -485 million yuan in the same period last year), primarily due to a significant year-on-year increase in borrowings obtained by the company. Short-term borrowings increased by 46.55% from the beginning of the year to 2.755 billion yuan, indicating the company used leverage to offset the short-term pressure on operating cash flow.
Simultaneous Upgrades in Technological Innovation and Product Portfolio
In the first quarter, the company obtained authorization for 38 patents, including 31 invention patents. It released 3 national standards and 4 national reference material standards. High-performance solid-state hydrogen storage materials, characterized by high hydrogen storage density, rapid hydrogen absorption and release at room temperature and low pressure, and ultra-long cycle life, have been officially launched into the market. A skid-mounted solid-state hydrogen refueling station received the "First Set" recognition from the Inner Mongolia Autonomous Region, further clarifying the strategic intent to enter the hydrogen energy sector. Regarding minor variety products, the company developed 2 new products and 14 customized, specialized minor variety products during the quarter. The output of minor variety products increased by 107.31% year-on-year. The high-value-added product lines are gradually scaling up, which helps improve the stability and cyclical resilience of the overall profit structure. The rare earth permanent magnet motor systems business continued to grow, with the bid-winning amount for a single project exceeding 10 million yuan for the first time. Application scenarios are further extending into industrial and high-end manufacturing fields, indicating the gradual implementation of the company's strategy to move downstream in the industrial chain.
Continued Policy Support
The national "16th Five-Year Plan" explicitly proposes to "continuously enhance the competitive advantage of rare earths and strengthen the high-quality and efficient comprehensive utilization of important strategic minerals," reaffirming the policy priority for the rare earth industry. As a strategic and critical mineral resource, the supply chain security and industrial upgrading of rare earths have been elevated to a national strategic level. As the country's largest strategic rare earth resource base, China Northern Rare Earth(Group)High-Tech Co.,Ltd. holds an irreplaceable core position in quota management, market pricing, and industry consolidation. The shareholding ratio of the controlling shareholder, Baotou Iron and Steel (Group) Co., Ltd., remained stable at 38.03%. Its central state-owned background provides strong support for the company in resource acquisition, funding, and policy coordination. Against the backdrop of tightening rare earth resource controls and increasing industry concentration, the company's competitive moat is expected to widen further as policies deepen.
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