China Rare Earth Holdings Investor Updates

Highlights

• China Rare Earth Holdings is not a state-backed company, as Rare Earth Exchanges had mistakenly identified. They have significant global rare earth element processing capabilities.
• The company has experienced a revenue decline but maintains a higher-than-average price-to-sales ratio in the Metals and Mining industry.
• With advanced production facilities, it produces 6,500 tonnes of rare earth products annually.
• The company serves diverse high-tech and traditional industrial sectors.

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China Rare Earth Holdings Limited (HKG:769) currently exhibits a price-to-sales (P/S) ratio of 1.6x, notably higher than nearly half of the companies in Hong Kong’s Metals and Mining industry, which have P/S ratios below 0.5x. This elevated P/S ratio persists despite the company’s revenue declining by 23% over the past year and an aggregate 49% over the last three years. The broader industry anticipates a 14% revenue growth in the coming year, making China Rare Earth’s performance appear particularly concerning. The company’s higher P/S ratio suggests that investors may be optimistic about a potential turnaround, but if the declining revenue trend continues, this optimism could lead to future disappointments.

China Rare Earth Holdings Ltd (China Rare Earth) is a publicly traded company based in China. It is principally engaged in the manufacture and sale of rare earths and refractory materials.

The Company

Much of China’s state-backed companies, along with firms such as this one, control 90% of rare earth element processing and magnet production, for example. China controls nearly all the world’s processing facilities, with even REEs extracted in other countries often sent there for refining. This dominance has significant geopolitical implications, as rare earth elements are essential for various high-tech applications, including defense and renewable energy technologies.

When evaluating China Rare Earth Holdings Limited, Investors should consider the company’s financial performance and its strategic position within the global REE supply chain. They must also understand the ownership structure.  Yuan Ying Qian, a board member, has the largest ownership position in the company among individual shareholders.

Yixing Xinwei Leeching Rare Earth Company Limited(the “Company”) is a subsidiary enterprise that separates and deep processes rare earth under China Rare Earth Holdings Limited. Its predecessor was the Yixing Rare Earth Separation Factory. With its staff of over 500, 30% of which being senior and middle technical staff, the Company is at present one of the largest private enterprises in the PRC, holding the lead in technology. Its major products include various unitary rare earth oxide, unitary rare earth chemical compounds, mixed and unitary rare earth metals, and rare earth trichromatic phosphor powder. Under the stable quality of its products, the Company has been selling its products to countries and regions such as the United States, Japan, Korea, Hong Kong, and Europe.

The Company currently has large-scale automated rare earth production lines equipped with advanced technology, sophisticated installations, and environmentally friendly and power-saving features, with the whole production process being automatically controlled by computer. The facility can now produce 6,500 tonnes of rare earth products annually.

The products are widely used in different industries ranging from traditional industries such as metallurgy, petroleum and chemical engineering, glass, and ceramics, etc., to nowadays high-tech electronic devices, computers, electric motors, automotive air purifiers, permanent-magnet materials, nanomaterials, magnetic memory chips, fiber optics, superconductors, and precision optics, etc. The Company enjoys export and import rights for its self-operated business, with its products accredited by the ISO 9002 system in recognition of their excellent quality, as per their website.