Magnets and permanent magnets: company screen?

The global magnet industry is fragmented across hundreds of suppliers, including 800 in Asia-Pacific. The total market is worth $20bn pa. The purpose of this data-file is to highlight a dozen leading magnets and permanent magnets companies, including Rare Earth magnets (e.g., NdFeB), ferrites and other magnetic components. 

End markets for magnets in the energy transition include electric motors, including for electric vehicles; electric compressors, especially for HVAC applications and heat pumps; wind turbines.

More mundanely, permanent magnets are also sold into ordinary household appliances like tumble dryers; and electronics such as iDevices and audio equipment. Indeed, the largest specialist magnets companies in our screen sell products to over 2,000 active customers, ranging from <1mm micro-magnets to 200mm monsters, with energy products from 1-60 MGOe.

High competition is borne out by middling margins, which tend to average c20% at the EBITDA level, c10% at the EBIT level and single digits at the net level. Although further upstream, Rare Earth miners have recently generated EBITDA margins closer to 50%, and expanding. There may also be higher margins for specialized and premium companies.

Private permanent magnets companies. An interesting trend in the screen is rising private equity activity. For example, a consortium led by Bain Capital acquired Hitachi Metals in 2022, and re-spun the company as Proterial in early 2023.

Listed pure-play permanent magnets companies in the screen include two Chinese Rare Earths magnet-makers, and a $5bn Australian Rare Earths miner.

Diversified companies are also noted in the screen, with Rare Earths, magnetic materials or magnet components as part of the broader commercial portfolios, including a leading Japanese large-cap.

An overview of all of these companies, as well as an overview of energy and magnetism, is also given for TSE written subscription clients in our recent research note here. Useful industry data-points behind the note, such as different magnet types and their typical properties and magnet costs ($/kg), are also compiled in the data-file.

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