With capital injection from BYD and China Northern Rare Earth, a rare earth IPO enterprise has emerged from Longyan, Fujian.

Rare earth elements are known as "the vitamins of industry", with irreplaceable excellent magnetic, optical and electrical properties, and play an important role in improving product performance, expanding product categories and raising production efficiency.

China's rare earth mine output accounts for nearly 70% of the global total. The United States, Australia and other countries are accelerating the layout of overseas production capacity to promote supply chain diversification, but overseas markets still face obvious bottlenecks in deep processing links such as smelting and separation. Recently, a rare earth processing enterprise from Longyan, Fujian has made an impact on IPO.

Gelonghui learned that recently, Fujian Jinlong Rare Earth Co., Ltd. (abbreviated as "Jinlong Rare Earth") has submitted its prospectus to the Beijing Stock Exchange, with Huatai United Securities as the sponsor. Jinlong Rare Earth focuses on the fields of deep processing of rare earths and rare earth functional materials. Its controlling shareholder is Xiamen Tungsten, a listed company on the Shanghai Stock Exchange, and the actual controller behind it is the State-owned Assets Supervision and Administration Commission of Fujian Province.

Jinlong Rare Earth has attracted industrial shareholders such as BYD and Northern Rare Earth to take shares, with revenue of nearly 5.8 billion yuan in 2025, but it also faces risks such as changes in industrial policies, fluctuations in raw material prices, concentrated suppliers, and soaring inventory scale.

The rare earth industry is greatly affected by policies, and the company faces the risk of raw material price fluctuations

China is rich in rare earth resources. By the end of 2025, the global rare earth reserves exceeded 85 million tons, among which China ranked first in the world with 44 million tons of rare earth ore resources, and Brazil and Australia ranked top three.

In terms of rare earth ore mining and beneficiation, the global rare earth ore mining output reached 390,000 tons in 2025, while China's output accounted for 69.23% of the global total, and the annual output of the United States and Australia accounted for 13.08% and 7.43% of the global total respectively.

Picture from the prospectus

China's large rare earth groups also occupy a leading position in rare earth smelting and separation, and a small number of overseas companies have rare earth smelting and separation capacity. At the same time, Chinese rare earth companies have significant cost advantages, so their dominant position in the rare earth smelting and separation industry will not be changed in the short term.

The global rare earth industrial chain has formed a complete ecosystem of "upstream resources, midstream processing, and downstream applications".

Among them, the participants in the upstream rare earth mining, smelting and separation fields include Northern Rare Earth, China Rare Earth, Shenghe Resources, China Rare Earth Nonferrous Metals, etc.;

In addition to Jinlong Rare Earth, the midstream material and processing enterprises also include Jingyi Magnetics, Zhongke Sanhuan, Ningbo Yunsheng, Laifeng Metallurgy and others;

The downstream applications cover new energy vehicles, energy-saving home appliances, wind power generation, consumer electronics, semiconductor chips, aerospace and other fields.

The main business of Jinlong Rare Earth is the deep processing of rare earths, as well as the R&D and application of rare earth functional materials, covering the entire industrial chain of rare earth deep processing. Its main products are four categories: high-purity rare earth oxides, rare earth metals, magnetic materials and luminescent materials.

Specifically, from 2023 to 2025 and in the January-June period of 2026 (referred to as the "reporting period"), the revenue proportion of Jinlong Rare Earth from magnetic materials increased from 48.69% to 61.79%, the revenue proportion of rare earth oxides decreased from 25.21% to 14.44%, the revenue proportion of rare earth metal products exceeded 20%, and the revenue proportion of luminescent materials was very low.

Composition of the company's main business revenue, picture source: prospectus

Among them, the company's rare earth oxide products are mainly high-purity and ultra-high-purity oxides, nano products and granulation powders, which are widely used in semiconductors, medical diagnosis, advanced ceramics, new energy cathode materials, metallurgy, chemical industry and other fields.

Rare earth metal products mainly include high-purity rare earth metals and alloys, rare earth functional targets. The former is mainly used in magnetic materials, metallurgy, hydrogen storage alloys, high-performance alloys and other fields, while the latter is applied in semiconductor chips, integrated circuits, MEMS piezoelectric sensors, new energy, optoelectronic fields, display panels, nuclear energy, aerospace, superconducting materials and other fields.

Magnetic materials are mainly sintered neodymium iron boron permanent magnet materials, which are applied in new energy vehicles, wind power generation, energy-saving home appliances, industrial motors and other fields.

Rare earth luminescent materials are mainly lighting phosphors and long-afterglow phosphors. The former is mainly used in the manufacture of energy-saving light sources, and the latter is used in municipal engineering, disaster prevention indication, decoration and other fields.

Jinlong Rare Earth needs to purchase main raw materials such as praseodymium neodymium metal, praseodymium neodymium oxide, rare earth ore oxide, dysprosium oxide, terbium oxide, neodymium metal, etc. Its suppliers include Northern Rare Earth, China Rare Earth, Aluminum Corporation of China, Shenghe Resources Holdings, Ganzhou Desen, Fujian Metallurgy and others.

In each period of the reporting period, the purchase amount of the company from the top five suppliers accounted for 57.35%, 65.62%, 65.39% and 69.75% of the total purchase amount of each period respectively, with a relatively large proportion. Among them, China Rare Earth Group's subsidiary China Rare Earth Jinlong series companies are related parties, and Fujian Metallurgy is the indirect controlling shareholder of the company.

The company faces the risk of raw material price fluctuations. During the reporting period, the proportion of direct materials in the main business cost of Jinlong Rare Earth exceeded 85%. If the price of main raw materials fluctuates, it will affect the production cost and gross profit margin of the company's products.

In addition, the rare earth industry is greatly affected by national policies. The state implements total quota management for rare earth mining, smelting and separation, and the quotas directly affect raw material supply and product prices; the import and export of rare earth-related products, technologies and equipment also need to comply with foreign trade regulatory regulations, and changes in industrial policies will directly affect the company's production and operation.

Gross profit margin is lower than the industry average, and inventory scale soars

In the past two years, the revenue and gross profit margin of Jinlong Rare Earth have fluctuated, and the net profit has increased.

Specifically, in 2023, 2024, 2025 and January-June 2026, the operating revenue of Jinlong Rare Earth was about 5.417 billion yuan, 4.298 billion yuan, 5.791 billion yuan and 4.068 billion yuan respectively, and the corresponding net profit was about 76 million yuan, 230 million yuan, 238 million yuan and 182 million yuan respectively.

Among them, in December 2023, Jinlong Rare Earth cooperated with China Rare Earth Group in the field of rare earth ore smelting and separation, and jointly funded the establishment of China Rare Earth Jinlong to operate the rare earth ore smelting and separation business, so that the company focused on high-purity rare earth oxides and their deep processing business. This cooperation led to a decrease in the company's original revenue from primary rare earth oxides.

During the reporting period, the gross profit margins of Jinlong Rare Earth were 8.22%, 11.13%, 10.48% and 11.44% respectively, with fluctuations, and the company's gross profit margin was lower than the average of comparable companies.

Among them, the company's gross profit margin was relatively low in 2023, mainly affected by the sharp decline in the market price of main raw materials such as praseodymium neodymium metal. The selling price of the company's magnetic material products in that year decreased more than the cost, resulting in a relatively low gross profit margin level of the company's magnetic materials in the same period.

The company's gross profit margin rebounded in the first half of 2026, which was mainly affected by the rise in the market price of upstream rare earth raw materials, leading to an increase in the gross profit margin of rare earth oxides and rare earth metals.

Comparative analysis of gross profit margins of comparable companies, picture from the prospectus

Competition in the industry where Jinlong Rare Earth is located continues to intensify, the supply price of upstream raw materials has the risk of fluctuation, and the expansion of downstream application fields and market growth rate also have uncertainties.

In recent years, the overall technical level and industrial concentration of China's rare earth industry have improved, but in the high-end application field, enterprises with large-scale R&D, production and stable supply capacity are still relatively limited.

At the same time, with the continuous development of downstream new energy vehicles, energy-saving motors, wind power and other fields, all links of the entire rare earth industrial chain are facing different degrees of capacity expansion pressure, and industry competition is extending from a single link to the entire industrial chain. In the future, if the market demand growth cannot keep up with the industry capacity expansion, and the company cannot improve product performance and cost control capabilities, it may be in a disadvantaged position in the increasingly fierce competition.

Most of the downstream customers of Jinlong Rare Earth belong to the manufacturing fields such as new energy vehicles, wind power, and energy-saving home appliances, including Midea Group, Northern Rare Earth, BYD, Siemens, Shin-Etsu Chemical, Goldwind Science and Technology, etc.

It is worth noting that with the growth of the company's business volume, the scale of accounts receivable has also continued to soar. At the end of each period in the reporting period, the balance of accounts receivable of Jinlong Rare Earth soared from about 927 million yuan to 1.714 billion yuan, and the proportion of accounts receivable in the operating revenue of each period increased from 17.12% to 42.15%, there is a risk of bad debts of accounts receivable.

In addition, at the end of each period in the reporting period, the book value of the company's inventory also increased from about 864 million yuan to 2.685 billion yuan. If the market demand changes in the future, it may lead to inventory backlog. At the same time, the fluctuation of raw material prices may also bring the risk of inventory depreciation loss.

BYD and Northern Rare Earth take shares, an IPO enterprise emerges from Longyan, Fujian

Jinlong Rare Earth was established in 2000, with its registered address in Changting County, Longyan City, Fujian Province, and was listed on the National Equities Exchange and Quotations in 2025. Its controlling shareholder is Xiamen Tungsten (600549.SH), and the actual controller is the State-owned Assets Supervision and Administration Commission of Fujian Province.

In addition, Yekong Fund, BYD, Northern Rare Earth, Jiaxing Qi'an, Changting State Investment, Chuanghe New Materials, etc. are all shareholders of the company.

The share capital structure of the company before and after issuance, picture from the prospectus

In terms of management, Zhong Kexiang, chairman of Jinlong Rare Earth, was born in 1973 with a doctorate degree. He has successively served as the shift supervisor of the tungsten workshop of Xiamen Tungsten Products Factory, deputy director of the tungsten workshop, manager of the first manufacturing department of Xiamen Tungsten Co., Ltd., etc. He also served as the general manager of Xiamen Jialu Metal Industry Co., Ltd., the general manager of Changting Jinlong Rare Earth Co., Ltd., the vice president of Xiamen Tungsten Co., Ltd., and now he is the chairman of Xiamen Tungsten Co., Ltd.

Chen Dakun, general manager, was born in 1981 with a master's degree. He has successively served as a reserve cadre in the Equipment Department of Xiamen Tungsten, a salesman and sales supervisor in the Operation Department, a procurement supervisor and assistant to the manager in the Procurement Department, deputy manager of the Energy Materials Sales Department, and also served as the assistant to the general manager and manager of the Marketing Department of Jinlong Rare Earth, deputy general manager, general manager of the Magnetic Materials Division, etc.

It is worth noting that Jinlong Rare Earth has made many cash dividends before listing. The prospectus shows that in 2024, 2025 and 2026, the cash dividend amount of Jinlong Rare Earth was 24.75 million yuan, 99 million yuan and 100 million yuan respectively.

For this listing, Jinlong Rare Earth plans to invest 700 million yuan of raised funds in the equipment renewal and intelligent upgrading project of high-performance rare earth permanent magnet material production line in the Changting base of Jinlong Rare Earth, and the construction of the second-phase project with an annual output of 5,000 tons of high-performance neodymium iron boron magnetic materials.

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This article is from the WeChat official account "Gelonghui New Stocks", the author is Fage Talks About New Stocks, and 36Kr is authorized to release it.