In 2025, a year marked by the reshaping of the global rare earth industry landscape, China Northern Rare Earth(Group)High-Tech Co.,Ltd. delivered a historic performance. The company achieved annual operating revenue of 42.563 billion yuan, a significant increase of 29.11% year-on-year. Net profit attributable to shareholders of the listed company reached 2.251 billion yuan, surging 124.17% compared to the previous year. The profit growth rate was nearly four times the revenue growth rate, reflecting the strong operational leverage and profitability enhancement driven by increases in both sales volume and product prices.
In terms of total profit, the company recorded 3.844 billion yuan for 2025, an 84.2% increase from 1.837 billion yuan in 2024, recovering to a level close to the peak seen in 2023. The weighted average return on equity rose to 9.56%, an improvement of 4.99 percentage points from the previous year. Basic earnings per share were 0.6227 yuan, nearly doubling from 0.2778 yuan in 2024. Based on this performance, the company plans to distribute a cash dividend of 0.13 yuan per share, totaling approximately 470 million yuan in dividends. The cash dividend payout ratio represents 20.88% of the net profit attributable to the parent company.
The core driver behind the substantial performance improvement was the combined effect of an overall upward trend in rare earth market prices and the company achieving record highs in both production and sales volume. Throughout 2025, prices for mainstream rare earth products, such as praseodymium and neodymium, showed a volatile but strengthening trend. A strategic security premium, coupled with a reshaping of supply and demand dynamics, provided a firmer price floor than in previous periods. Concurrently, the company saw growth across all product lines, including smelting and separation output, rare earth metals, magnetic materials, hydrogen storage materials, polishing materials, and permanent magnet motors. The full commissioning and operation of the first phase of its green smelting upgrade and transformation project further solidified its production capacity foundation.
Notably, the fourth quarter emerged as the strongest period of the year. The company achieved single-quarter revenue of 12.272 billion yuan and a net profit attributable to the parent of 710 million yuan in Q4, both figures representing the highest quarterly results for the year. This indicates an acceleration in demand during the second half and the successful ramp-up of the company's production capacity. Looking ahead to 2026, the company has set a revenue target exceeding 44 billion yuan and a total profit target above 3.5 billion yuan, demonstrating strong confidence at the outset.
**Volume-Price Synergy Drives Revenue Leap** In 2025, China Northern Rare Earth's operating revenue surged from 33.2 billion yuan the previous year to over 42.5 billion yuan, an increase of nearly 10 billion yuan. This also represents a significant step up from the 33.5 billion yuan revenue in 2023, marking a阶梯式跨越 (staged leap).
Analyzing the revenue structure, the industrial segment (self-produced rare earth products and new materials) contributed 33.087 billion yuan, a year-on-year increase of 36.35%. The gross profit margin for this segment reached 13.84%, an improvement of 2.19 percentage points from the previous year. The commercial segment (trading business) contributed 7.794 billion yuan, growing 10.53%, with a gross margin of 1.92%. Revenue from the environmental protection segment was 1.47 billion yuan; however, its gross margin decreased by 5.42 percentage points year-on-year to 23.44%, affected by price fluctuations of certain product varieties.
By product category, primary rare earth products (including raw materials and new materials) generated revenue of 32.637 billion yuan, with a gross margin of 13.97%, a slight increase of 2.36 percentage points. Revenue from applied rare earth products (including permanent magnet motors, etc.) was 450 million yuan, with a gross margin of 4.62%, which narrowed by approximately 9.41 percentage points due to cost pressures.
Geographically, domestic revenue reached 41.737 billion yuan (accounting for over 99% of the total), a year-on-year increase of 28.44%, with the gross margin improving by nearly 2 percentage points to 11.94%. Overseas revenue was 614 million yuan, surging 99.35% year-on-year due to changes in export patterns, although the absolute scale remains relatively small.
**Cost Structure: Surging Raw Material Costs Test Management Capability** Behind the high profit growth, cost pressures cannot be ignored. The operating cost for 2025 was 37.367 billion yuan, an increase of 26.29% year-on-year. As this growth rate was slightly lower than the revenue growth rate, it directly contributed to the improvement in gross margin.
Within the cost structure of the industrial segment, the proportion of raw material costs jumped from 75.92% the previous year to 83.14%. The absolute value of raw material costs surged from 16.276 billion yuan to 23.703 billion yuan, an increase of 45.63%. This primarily reflects the market-driven price increases for rare earth concentrates procured from Baotou Steel. In contrast, material and power costs were significantly reduced from 3.263 billion yuan to 2.583 billion yuan (a decrease of 20.85%), highlighting the effectiveness of the company's refined energy consumption management. During the reporting period, the contract value for rare earth concentrates purchased from the related party Baotou Steel was 12 billion yuan (including tax), with 9.417 billion yuan fulfilled within the year.
In research and development, expensed R&D investment for the year was 318 million yuan, a year-on-year increase of 6.07%, accounting for 0.75% of revenue. However, management emphasized in the report that the R&D intensity reached over 5%, presumably based on a broader calculation that includes R&D expenditures from internal scientific research platforms.
Taxes and surcharges amounted to 210 million yuan, a year-on-year increase of 50.87%, mainly due to increased value-added tax surcharges and stamp duty corresponding to the business expansion. Credit impairment losses surged 159.67% year-on-year to 215 million yuan, primarily due to impairment provisions for certain non-current assets. This item warrants subsequent attention.
**Cash Flow: Operational Improvement, Significant Contraction in Financing** Net cash flow from operating activities in 2025 was 1.115 billion yuan, a year-on-year increase of 8.71%. While this represents an improvement, the degree is relatively moderate given the substantial revenue growth, mainly because the fourth quarter saw a net operating cash outflow of -1.61 billion yuan, which dragged down the full-year performance. By quarter, operating cash flow in the third quarter was as high as 1.799 billion yuan, forming a sharp contrast with the fourth quarter, possibly related to inventory buildup timing and accounts receivable structure at the quarter-end.
Net cash outflow from investing activities was 1.183 billion yuan, narrowing from -1.655 billion yuan in the previous year, mainly due to reduced capital expenditure on infrastructure projects following the completion of the first phase of the green smelting upgrade. Net cash flow from financing activities was an outflow of 955 million yuan, compared to a net inflow of 1.003 billion yuan in the same period of 2024. This sharp turnaround primarily stemmed from the company's proactive reduction of interest-bearing debt and decreased new borrowing. This shift indicates a more conservative and稳健 (steady) financial leverage strategy adopted by the company in 2025.
On the balance sheet, taxes payable soared from 128 million yuan at the beginning of the year to 490 million yuan (an increase of 284.21%), confirming the significant rise in income tax and VAT following the profit surge. Current portion of non-current liabilities doubled from 1.259 billion yuan to 2.572 billion yuan, warranting attention to short-term debt refinancing arrangements. Fixed assets increased from 7.004 billion yuan to 9.12 billion yuan (an increase of 30.23%), mainly due to the transfer of the green smelting project to fixed assets.
**Strategic Layout: Smart Factory Implementation, Vertical Industry Chain Extension** In 2025, the company was active in extending its industry chain. The first phase of the green smelting upgrade and transformation project was fully operational, and the second phase has commenced construction. The total budget for this project does not exceed 7.799 billion yuan, with 759 million yuan paid out during the year and a cumulative payment of 2.241 billion yuan. Several key projects, including Gansu Rare Earth, Huaxing Rare Earth, North Zhongxin Antai, North Magnetic Materials, and North Zhaobao, were completed and put into operation. The newly established subsidiary, North Jinlong (51% owned), was consolidated, expanding the company's rare earth separation capacity footprint.
In the field of智能化 (intelligentization), the company was recognized as one of the first batch of卓越级 (exemplary-level) smart factories by the Ministry of Industry and Information Technology. The numerical control rate of key processes and the digitalization rate of production equipment continued to improve. The company's stock was selected for the first time as a constituent of the CSI A50 Index and re-entered the SSE 50 Index. Its domestic mainstream ESG rating was upgraded to a maximum of AAA. Its market capitalization hit a three-year high and maintained its position as the industry leader.
Simultaneously, the company streamlined its non-core assets: subsidiaries Hebei Huakai (40% equity) and Pingyuan Magnesium Aluminum (51% equity) were successively sold, and Xibao Tongyong entered bankruptcy liquidation. The consolidation scope net decreased by three subsidiaries, leading to an overall optimization of asset quality.
**Industry Beta and Company Alpha: Can the Momentum Continue into 2026?** To understand the outperformance of China Northern Rare Earth in 2025, it is essential to separate the industry beta from the company's alpha. At the industry level, the Ministry of Commerce implemented export controls on seven types of medium and heavy rare earths, significantly elevating their strategic security premium. Prices for light rare earths generally trended upwards, with the CRE index reaching a yearly high in October. Globally, the volume of rare earth imports decreased by 24% year-on-year, while the value increased by 16.3%, indicating a significant rise in price per ton. These factors provided strong external support for the company's performance.
At the company-specific level, beyond volume and price factors, the most noteworthy source of alpha is the continuous optimization on the cost side. The full processing cost decreased further year-on-year. Mass production of solid-state hydrogen storage devices was achieved, and the production and sales of high-value-added products like permanent magnet motors and magnetic materials reached record highs, shifting the product mix towards higher-margin segments.
For 2026, the company targets revenue above 44 billion yuan and total profit above 3.5 billion yuan, representing growth rates of approximately 3.4% and 3.4% respectively. Compared to the high growth in 2025, these targets appear relatively conservative. However, it is important to note the high profit base established in 2025 and the inherent volatility risks in rare earth prices. The progress of the second phase of the green smelting project, the trial production of the North Jinlong separation line, the ongoing digestion of lanthanum-cerium inventory, and the release of new magnetic alloy capacity will be key factors determining whether the 2026 performance can exceed expectations.