SMM February 12 News: On February 12, Baowu Magnesium's stock price rose. As of 10:31 on the 12th, Baowu Magnesium increased by 0.6%, trading at 11.81 yuan per share.
On the news front, Baowu Magnesium conducted a survey with specific parties on February 11, addressing some concerns from investors:
Q: What are the advantages of magnesium alloy lightweight electric drive assemblies?
Baowu Magnesium responded: The magnesium alloy casing electric drive assembly integrates advanced integrated design concepts, cutting-edge manufacturing technologies, and high-quality material selection. The lightweight characteristics of magnesium materials not only help reduce power consumption but also significantly enhance the driving range of EVs. Additionally, magnesium alloys have advantages in mechanical performance, processing convenience, and electromagnetic shielding capabilities.
Q: What is the impact of magnesium prices being lower than aluminum prices on the company?
Baowu Magnesium responded: With magnesium prices lower than aluminum prices, it presents a great opportunity for the magnesium industry. It is particularly beneficial for downstream applications such as large automotive components, integrated magnesium alloy die-cast parts for vehicles, robotics, and construction templates, further encouraging downstream customers to use magnesium. Previously, we promoted magnesium applications from a performance perspective; now, we can also promote them from a cost perspective.
Q: What are the advantages of semi-solid magnesium alloy products?
Baowu Magnesium responded: Semi-solid magnesium alloy products can improve product porosity defects, enhance the strength of the base material and the product to a certain extent, and improve fatigue performance and corrosion resistance due to the improved material structure. Moreover, the production process does not involve melting, eliminating the need for gas protection, making it more low-carbon and environmentally friendly, further aligning with market demands for lightweight and environmentally friendly large-size, high-quality magnesium alloy products.
Q: How does the company view the application of magnesium alloys in the robotics field?
Baowu Magnesium responded: The collaboration between Baowu Magnesium and Estun in the robotics field not only reflects the deep integration and mutual benefits of the two companies' respective strengths but also represents a significant breakthrough in technological innovation and application exploration in the industrial sector. Magnesium alloys empower the robotics industry with four major advantages: "light, fast, stable, and efficient," aiming to demonstrate stronger competitiveness and provide a new solution for lightweight, high-efficiency, and fast-response industrial automation.
Q: Which automotive components does the company believe will see faster adoption of magnesium alloys in the coming years?
Baowu Magnesium responded: We believe that, similar to the development history and logic of small magnesium alloy automotive parts, components with a favorable cost-performance ratio will develop rapidly. In recent years, as more manufacturers with design and production capabilities for medium and large magnesium alloy automotive parts emerge, prices are becoming more rational. Compared to other materials, the cost-performance ratio of magnesium materials is increasingly favorable, leading to higher penetration rates in automotive applications, such as instrument panel brackets, seat brackets, center console brackets, display backplates, door inner panels, seat frames, and electric drive casings.
On the evening of January 9, Baowu Magnesium announced that the company had formulated a "Dual Improvement in Quality and Returns" action plan, with specific measures as follows: 1. Deepen the core business to promote high-quality development; 2. Persist in continuous innovation to consolidate competitive advantages; 3. Continuously improve standardized operations and actively fulfill social responsibilities; 4. Enhance the quality of information disclosure and deepen investor relations management; 5. Emphasize returns and firmly establish the concept of shareholder returns.
On December 31, 2024, Baowu Magnesium stated on the investor interaction platform: The company currently does not collaborate with Unitree Robotics to provide corresponding lightweight materials but is cooperating with top-tier domestic industrial robotics companies to supply magnesium materials.
As Baowu Magnesium has not yet released information regarding its 2024 performance, a review of its Q3 report reveals the following: In the first three quarters, the company achieved operating revenue of 6.347 billion yuan, up 14.09% YoY; net profit attributable to shareholders was 154 million yuan, down 25.88% YoY. During the reporting period, Baowu Magnesium's basic earnings per share were 0.155 yuan, and the weighted average return on equity was 2.88%.
Baowu Magnesium's Q3 report indicates that the increase in operating revenue was primarily due to higher sales of deep-processed products compared to the same period last year. Regarding the decline in net profit, Baowu Magnesium stated that the decrease in magnesium prices led to a decline in the gross profit of magnesium alloy products.
A research report by Galaxy Securities on November 21, 2024, stated that central state-owned enterprises in the non-ferrous sector bear the responsibility of ensuring national resource security and driving the high-quality transformation and upgrading of China's non-ferrous metal industry. Under the national development requirements and policy support, the resource expansion, breakthroughs in new materials, and mergers and acquisitions by central state-owned enterprises in the non-ferrous sector are expected to drive growth, demonstrating strong growth potential. With the continuous upgrading of assessment indicators for central state-owned enterprises, the enhancement of profitability, cost control, and asset structure improvement under the "One Profit and Five Rates" framework will lead to improved operational quality and performance growth. Additionally, as central state-owned enterprises strengthen market value management, increased dividend payouts will enhance investment returns, and the pace of injecting high-quality mine resource assets by major shareholders is expected to accelerate, potentially expanding valuations. It is recommended to focus on leading central state-owned enterprises in various strategic metal segments of China's non-ferrous metal industry, including Zijin Mining, Chalco, Shandong Gold, Zhongjin Gold, China Rare Earth, Salt Lake Co., Baowu Magnesium, and GRINM.
A research report by Tianfeng Securities on November 1, 2024, assigned a "Buy" rating to Baowu Magnesium. The main reasons for the rating include: 1) The comprehensive layout of the magnesium industry chain is progressing steadily; 2) Profitability is affected by magnesium prices, but the deep-processing layout holds potential for improvement; 3) Magnesium industry: The supply structure is being reshaped, and the evolution of "small" metals into "big" metals is unstoppable. Risk warnings: Risks of market demand falling short of expectations, risks of significant fluctuations in raw material prices, risks of project construction delays, risks of dolomite demand falling short of expectations, exchange rate risks, and calculation deviation risks.
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