Northern Rare Earth’s Q1 revenue neared 12 billion, net profit doubled, Zhang Jianping newly entered the top ten tradable shareholders | Financial Report News

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Northern Rare Earth delivered a far better than expected report card for the first quarter of 2026. The company achieved operating income of 11.859 billion yuan, an increase of 27.69% year-on-year; net profit attributable to shareholders was 918 million yuan, a surge of 113.12% year-on-year.

The core logic driving this performance boom is clear and direct: The average price of main rare earth products, represented by praseodymium-neodymium oxide, rose significantly year-on-year in the first quarter, leading to a substantial increase in gross profit. Thanks to continued downstream demand growth for rare earth permanent magnet materials, the rare earth market strengthened overall during the reporting period. As the largest strategic rare earth resource base in the country, the company benefited from a strong performance elasticity through the dual resonance of production/sales volume and prices.

Profit indicators improved on all fronts: total profit reached 1.252 billion yuan, up 82.05% year-on-year; net profit excluding non-recurring gains/losses was 883 million yuan, up 103.21% year-on-year, indicating that the performance improvement relies heavily on core business operations rather than one-off gains; basic earnings per share jumped from 0.1191 yuan last year to 0.2539 yuan, with weighted average return on net assets reaching 3.65%, up 1.75 percentage points over the same period last year.

It is worth noting that Zhang Jianping has newly entered the company's top ten tradable shareholders, holding 72.2544 million shares, accounting for 2% of total share capital. Calculating by quarter-end share price, his holdings are worth 3.445 billion yuan. Currently, Zhang Jianping holds four stocks in Q1: Northern Rare Earth, Dongcai Technology, Western Materials, and Sichuan Gold. Except Dongcai Technology, which is an increase, the other three are new positions for Q1.

Recovery in Rare Earth Prices is the Main Contributor

The fundamental driving force behind this explosive performance is the systematic rise in rare earth commodity prices. The company clearly stated in the report that the year-on-year increase in the average price of praseodymium-neodymium products in Q1 was the core reason for improved gross profit. Praseodymium-neodymium oxide is a key raw material for the production of NdFeB permanent magnet materials, and its price trends are closely tied to demand changes in high-growth sectors like new energy vehicle motors, industrial robots, and wind power.

Looking downstream, terminal demand for rare earth permanent magnet materials grew in Q1, boosting the overall rare earth market. The company's magnet material subsidiaries continued to leverage their production capacity advantage; Baotou region's supply coverage now exceeds 95%, achieving full coverage of leading magnet material producers and further strengthening product price bargaining power. These structural advantages are fully amplified during price upcycles.

The Profit Structure Behind "Doubled" Net Profit

The profit statement shows total operating costs for Q1 were 10.67 billion yuan, up 23.7% from 8.628 billion last year; cost expansion was lower than income growth, directly improving gross margin.

As for non-recurring gains/losses, this period totaled around 343 million yuan, with fair value change gains contributing 342 million yuan (last year was a loss of 184 million, a positive year-on-year contribution of about 526 million), mainly from valuation changes in trading financial assets held by the company. In comparison, net profit excluding extraordinary gains still increased by 103.21% year-on-year, fully demonstrating that the improvement in core business profitability does not rely on financial asset volatility.

Management expenses were well controlled: this period's admin expenses were 223 million yuan, down around 9% from last year's 245 million yuan, achieving cost contraction amid sharp revenue growth, reflecting some operating leverage effect.

Operating Cash Flow Turns Negative: "Lagging Effect" of Taxes

The net cash flow from operating activities shifting from positive to negative is the most confusing figure in this quarterly report. Breaking it down, the company paid taxes totaling 930 million yuan in Q1, while last year only 206 million, a stunning year-on-year increase of 351%, with this item alone consuming about 724 million yuan in cash.

The logic behind this difference is: after profitability improved in 2025, related tax payments were concentrated and settled in Q1 2026, causing noticeable cash flow pressure. Meanwhile, prepayments surged by 150.88% year-on-year, reflecting the company stocking up on upstream raw materials, which also consumed some operating cash.

Correspondingly, net cash flow from financing activities was 641 million yuan (last year was -485 million yuan), mainly due to a substantial increase in borrowings; short-term borrowings rose 46.55% from the start of the year to 2.755 billion yuan, with the company using leverage to offset short-term pressures on operating cash flow.

Technological Innovation and Product Matrix Upgraded Together

In Q1, the company was granted 38 patents, including 31 invention patents; published 3 national standards and 4 national sample standards. High-performance solid-state hydrogen storage materials—with high hydrogen density, rapid absorption/desorption at room temperature and low pressure, and extra long cycle life—have officially been released to market. The skid-mounted solid-state hydrogen refueling station obtained "first unit set" recognition from Inner Mongolia, further clarifying the company's strategic focus on the hydrogen energy sector.

For niche products, the company developed 2 new products and 14 custom and specialty niche products this quarter. Output of niche products grew by 107.31% year-on-year, with the high value-added product line gradually expanding, helping improve the overall stability and anti-cyclicality of profit structure.

The rare earth permanent magnet motor system business continues to grow; for single projects, tender amounts broke through 10 million yuan for the first time, with application scenarios further extending to industry and high-end manufacturing. The strategic path downstream along the industrial chain is gradually taking shape.

Policy Dividends Continue to Increase

The national "Fifteenth Five-Year Plan" clearly calls for "continuously strengthening competitive advantages in rare earths and optimizing high-quality and efficient utilization of key strategic minerals," reaffirming the policy priority for the rare earth industry. As a strategic key mineral resource, the security and upgrade of its supply chain has risen to the level of national strategy. Northern Rare Earth, as the largest strategic rare earth resource base in the country, has an irreplaceable core position in quota management, market pricing, and industry integration.

Controlling shareholder Baotou Steel (Group) Co., Ltd. maintains a stable holding proportion of 38.03%. Its central state-owned background gives strong guarantees for resource acquisition, financial support, and coordinated policy. As rare earth resource management tightens and industry concentration increases, the company's competitive moat will further widen thanks to deepening policy support.

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