Documenting some readings which I came across while reading about Permanent Magnets.
Quadrant International: History page provides some very good insights on what the company considers it’s historical landmarks. It was established in 1992 with foray into light manufacturing and assembly industry → established it’s centrally located facility in Kentucky in 2001 → opened it’s own manufacturing hub in Hangzhou in 2010 → Foresee group, China becomes a contract manufacturer of Quadrant in 2013 → Opened motor manufacturing lines in Huizhou, China in 2018 → Quadrant opened it’s Australia operation in 2020 → Quadrant opened it’s Germany, Japan and Vietnam centers in 2021.
What am trying to highlight is, Quadrant was majorly focused on US & Chinese operation till 2020 and suddenly they have gone into different geographies such as Australia, Japan, Germany, Vietnam and now a chance of a JV with PML, India ?
What could be driving this change in stance ?
One possible explanation is the demand scenario is so strong that they want to diversify outside of China and US and the normal China+1 theme.
Second possible explanation as shared here
Third is, a major trend towards being self sufficient in rare earth resources (which includes neodymium magnets) which started few years back. Watching these 3 videos gives insights on what and why this trend. The 3rd video from James Litinsky, CEO of MP Materials is a very good one.
Tech Companies Depend on China for Rare Earths. Can That Change? | WSJ
Rare earths crunch? Why we need them and who has them | Business Beyond
#AIS: MP Materials CEO James Litinsky on rare earths, supply chain, and energy independence
tweet from DARPA made on 13th May’23, stressing the importance of reducing overseas supply chain risk for rare earth metals
https://twitter.com/DARPA/status/1657097533745684482?s=20
Indian govt. (Indian Rare Eearth Limited) too opened a permanent magnet manufacturing facility in Vizag just last week, which saw nearly 200 cr. of investment to manufacture 3000kg of Samarium Cobalt permanent magnets.
https://twitter.com/india_projects/status/1656636082585468929?s=20
https://twitter.com/infraAP/status/1657241457252765696?s=20
Going to the Foresee Group site, one get’s a sense of the mind boggling size and scale of this company & industry. Foresee employs 600+ engineers and scientists, 5800+ employees, holds 86 patents, spends 20% on R&D (Same as Quadrant). This has all the characteristics of a high end R&D intensive, design oriented manufacturing industry which is critical for many industries including, defense, aerospace, electronics, EV, etc
Funnily, both Quadrant & Foresee use same picture (one of the pics) of a employee on both their site. Does this kind of tells us that both companies operations were very intertwined and Foresee wasn’t just a “contract manufacturer” ?? > Foresee & Qudrant
PML seems to have huge scope to upscale it’s capabilities & operations over time if they pull off the Quadrant opportunity. It’s up to them now how they grab this.
Given that now PML has announced it’s first ever public con call on 19th, let’s hope it has some good news to share with us. Stock price has shot up ever more in last 2 days since the con call announced.
Disc: No reco. Have some holding, Hoping, if the story is good, there will be multiple chance to scale the position, since it’s not really cheap based on trailing multiples. But overall mcap of just 1000 cr. compared to scale of opportunity, this could be another Shivalik Bimetals?
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