SRE New Materials Research Report: Focusing on the Niche Segment of Metallic New Materials, with High Prosperity in Downstream Industries

The company has essentially achieved industry-leading technical capabilities across multiple domains. Its R&D and manufacturing of high-strength, high-conductivity copper alloy end rings and bars, as well as medium- and high-voltage electrical contact materials and components, have resolved China’s reliance on imports for critical materials used in national rail transit and State Grid construction projects. Its medium- and high-voltage electrical contact materials and components have already secured a leading domestic market share in the copper-chromium contactor segment. Meanwhile, the company is one of China’s few enterprises capable of mass-producing high-performance metallic chromium powder, with processing technologies and key parameters ranking among the world’s best. It is also one of only a handful of domestic firms able to supply CT and DR X-ray tube components, and the world’s first enterprise to successfully develop and mass-produce high-iron-content copper-iron alloy materials for high-speed rail applications. The company aims to achieve over 70% domestic market share and over 50% global market share, positioning itself as a global leader in this niche segment. 4. Profitability Forecast The company’s net profit margin ranks among the industry’s highest, and its profitability is expected to further improve. In 2021, its gross margin stood at 19.08%, and its net profit margin at 6.42%; in Q3 2022, the gross margin was 18.69% and the net profit margin rose to 8.04%. Although the gross margin declined slightly due to rising copper prices and shifts in product mix, it remains industry-leading. From 2018 to 2021, the company’s net profit compound annual growth rate (CAGR) reached 54%, while its revenue CAGR stood at 25%. As the company increasingly focuses on higher-value-added parts and components—and raw material prices stabilize—its gross margin is projected to reach as high as 30%, further boosting profitability. The company demonstrates strong operational efficiency, reflected in high inventory turnover and total asset turnover ratios. In 2021, its inventory turnover ratio was 4.81 times (equivalent to 92.6 days of inventory), showing a significant improvement from 2020–2021, indicating enhanced sales capability and liquidity. With the ramp-up of high-turnover ingot products under its fundraising projects, return on investment is expected to rise further. Its total asset turnover ratio reached 0.83 in 2021, reflecting steady improvement in asset management quality and accelerated asset utilization, alongside robust sales performance. Following its IPO, the company’s debt-to-asset ratio declined further, optimizing its capital structure. This ratio dropped from 58.11% in 2019 to 32.17% in Q3 2022. By comparison, peers’ Q3 2022 ratios were: Boway Alloy (56.03%), Fuda Alloy (51.59%), and Xinke Materials (53.44%). Thus, the company maintains a relatively low debt-to-asset ratio and correspondingly lower capital costs. Its cash flow remains abundant: operating cash flow surged significantly in 2019, reaching RMB 91.43 million, RMB 95.74 million, and RMB 73.04 million in 2019, 2020, and 2021, respectively. The company’s fundraising projects will nearly triple production capacity for high-strength, high-conductivity copper alloy materials and components, while also adding new copper-iron alloy capacity. 2021 capacity figures are estimated based on output, assuming 100% utilization rates for high-strength, high-conductivity copper alloy materials/components, high-performance metallic chromium powder, and X-ray tube components; and an 83% utilization rate for medium- and high-voltage electrical contact materials/components. Total 2021 capacity was approximately 10,000 tons.

Research on the Metals and Advanced Materials Industry: Valuation Recovery for Metal Resources, and Oversold Reversal for Metallic New Materials

Expansion of carbon assets will effectively accelerate the rapid development of electrochemical energy storage. Carbon asset expansion will promote the construction of a new power system centered on renewable energy, laying the foundation for large-scale, market-driven deployment of energy storage. Beyond enhancing corporate enthusiasm for investing in clean energy sources such as solar and wind, it can also effectively reduce the system cost of ‘photovoltaic (wind) + storage’ configurations. According to the Global Energy Interconnection Development and Cooperation Organization’s report ‘China’s Carbon Neutrality Roadmap Before 2060’, building China’s energy internet would yield a society-wide marginal carbon abatement cost of approximately RMB 260 per ton. Considering this societal decarbonization cost (RMB 260/ton) and current international carbon prices in Europe and the U.S. (exceeding RMB 300/ton), we assume China’s carbon price could reach RMB 260/ton. Assuming coal-fired power generation emits 0.87 kg of CO₂ per kWh, each kWh of solar (or wind) power avoids 0.87 kg of emissions—thereby generating 0.87 kg of carbon assets. At RMB 260/ton, this translates to a value of RMB 0.226 per kWh. Consequently, when the carbon price reaches RMB 260/ton, the levelized cost of electricity (LCOE) for ‘photovoltaic (wind) + storage’ systems could decrease by RMB 0.226/kWh. Such effective cost reduction will accelerate the deployment of energy storage systems. Energy storage is poised to become the primary driver of lithium demand growth following new-energy vehicles. Whether aiming to reduce carbon emissions or expand carbon assets, enterprises will actively invest in and deploy ‘photovoltaic (wind) + storage’ systems. Electrochemical energy storage batteries will predominantly adopt lithium iron phosphate (LFP) chemistry going forward; thus, rapid growth in energy storage will substantially boost demand for lithium carbonate. We project lithium demand from the energy storage battery sector will reach 70,000 tonnes LCE by 2025 and 620,000 tonnes LCE by 2030—a compound annual growth rate (CAGR) of approximately 67%. Energy storage is therefore expected to emerge as the main driver of lithium demand growth after new-energy vehicles, propelling the lithium industry into a new upcycle. Lithium resources will remain the principal long-term bottleneck constraining lithium industry development. In 2021, the core contradiction in the lithium industry was the imbalance between limited lithium resource supply and unexpectedly strong demand driven by the new-energy vehicle sector. We believe this contradiction persists into 2022. Global lithium resource supply is highly concentrated among leading producers. Although several major producers plan to bring new capacity online in 2022, overall progress remains slow; notably, rising lithium prices have not materially accelerated commissioning timelines. Accounting for ramp-up periods, lithium resource supply will remain tight amid surging demand. The current record-high lithium prices have spurred accelerated mergers, acquisitions, and exploration of greenfield lithium projects—but the typical capital expenditure (capex) conversion cycle spans 3–5 years or longer. A wave of lithium mine start-ups and reactivations is expected from H2 2022 through 2023, mostly comprising projects delayed from pre-pandemic capex cycles. Accelerated capex deployment in this cycle began only in H2 2021; thus, meaningful production contributions are unlikely before 2025. Accordingly, we forecast global lithium resource supply will remain constrained overall from 2022 through 2025.

REalloys Settles Shares with Dark Horse Capital, Delays Metallization to 2028

1 day ago

REalloys registered settlement shares for Dark Horse Capital and postponed its heavy rare earth metallization commissioning to Q1 2028, citing a $36.8 million net loss and pausing Euclid facility expansion.

Rare Earth Exchanges

2026-10-30

REalloys Settles Shares with Dark Horse Capital, Delays Metallization to 2028

REalloys Settles Shares with Dark Horse Capital, Delays Metallization to 2028

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