Xingyuan Zhumag: At present, overseas customers are mainly distributed in North America, Germany, Poland, Hungary, and other regions.

SMM December 19 News:

On December 19, Xingyuan Zhumag's stock price continued the downward trend from the previous trading day. As of 10:38 a.m. on the 19th, Xingyuan Zhumag fell by 1.6%, trading at 51.15 yuan per share.

The record of a survey conducted with specific parties on December 18 revealed the following:

1. What is the current distribution of the company's overseas customers?

Xingyuan Zhumag responded: The company's overseas customers are mainly distributed in North America, Germany, Poland, and Hungary.

2. What are the barriers in the magnesium alloy industry?

Xingyuan Zhumag responded: Due to the differences in physical properties between magnesium alloys and aluminum alloys, magnesium dust, scraps, and thin materials generated during the production process can easily cause fire or explosion accidents when exposed to open flames. Therefore, safe production is fundamental for magnesium alloy die-casting enterprises. The safety and protective measures in magnesium alloy die-casting production involve processes such as magnesium alloy smelting, die-casting, post-processing, and precision machining, as well as the storage and handling of corresponding dust, scraps, and thin materials. These require high standards for the company's safety production technology, safety management, professional expertise of operators, and the quality of production equipment.

3. What are the performance differences between magnesium alloy products and aluminum alloy products?

Xingyuan Zhumag responded: As the automotive industry increasingly emphasizes energy conservation, emission reduction, and fuel efficiency, lightweight vehicles have become a development trend. The density of magnesium alloy is about two-thirds that of aluminum alloy and one-fourth that of steel. Using magnesium alloy can effectively reduce vehicle weight. Magnesium alloy also has excellent damping and electromagnetic shielding properties, meeting customers' specific performance requirements in vibration reduction, noise reduction, and electromagnetic interference resistance.

4. What considerations led to the choice of a base in Thailand?

Xingyuan Zhumag responded: The decision to establish an overseas factory in Thailand was primarily based on its geographical location and market coverage, stable economic and policy environment, industrial support, and relatively well-developed infrastructure.

5. Does the company have any cooperation with XPeng Motors?

Xingyuan Zhumag responded: The company's products are currently applied in some car models of XPeng Motors.

6. Does the raised tariff have any impact on the company?

Xingyuan Zhumag responded: The company will continue to monitor tariff dynamics in overseas markets and take appropriate measures when necessary to address uncertainties in tariffs in certain overseas markets.

7. What is the expected product structure of the Fenghua factory?

Xingyuan Zhumag responded: The Fenghua factory's product structure will primarily focus on large magnesium alloy precision-formed parts for automotive use.

Xingyuan Zhumag, a company engaged in the R&D, production, and sales of precision die-casting products made of magnesium and aluminum alloys, as well as supporting die-casting molds, has recently announced multiple project awards from customers. Among them:

On the evening of November 29, Xingyuan Zhumag announced that it had recently received a supplier nomination email from a domestic auto parts producer. The company will develop and supply magnesium alloy powertrain housing components for NEVs to this customer. According to the customer's plan, the project is expected to begin mass production in mid-2025, with total sales over the next seven years (2025-2031) estimated at 710 million yuan.

Additionally, on the evening of October 30, the company announced that it had recently received a supplier nomination from an auto parts producer to develop and supply magnesium alloy display backplate series products. According to the customer's plan, this project is expected to begin mass production in Q4 2026, with a life cycle of five years and total sales during the life cycle estimated at 205 million yuan.

On the evening of September 24, Xingyuan Zhumag announced that it had recently received a supplier nomination letter from an auto parts producer to develop and supply magnesium alloy reducer housing products for NEVs. According to the customer's plan, this project is expected to begin mass production in June 2025, with total sales over the next three years (2025-2027) estimated at 170 million yuan.

From Xingyuan Zhumag's performance: The company's Q3 2024 report showed that in the first three quarters, it achieved operating revenue of 288 million yuan, up 13.54% YoY; net profit attributable to shareholders was 56.0801 million yuan, down 3.72% YoY; net profit excluding non-recurring items was 51.1654 million yuan, down 0.81% YoY; net cash flow from operating activities was 55.1171 million yuan, up 105.93% YoY. During the reporting period, Xingyuan Zhumag's basic earnings per share were 0.701 yuan, and the weighted average return on equity was 5.23%.

Yongxing Securities released a report on November 3, commenting on Xingyuan Zhumag: Q3 2024 single-quarter revenue grew approximately 26.89% YoY and 3.49% QoQ. As a pioneer in the magnesium alloy die-casting field, the company is advancing the application of magnesium and aluminum alloys in automotive lightweighting, electrification, and intelligence, developing both domestically and internationally, and promoting existing products to other automotive brands. We believe the QoQ improvement in gross margin was mainly due to a decline in raw material prices in Q3 2024 compared to Q2 2024. The company's Q3 2024 net profit margin was approximately 18.28%, down 5.19 percentage points YoY and 0.82 percentage points QoQ. The total expense ratio in Q3 2024 was approximately 12.38%, down 2.25 percentage points YoY and up 1.49 percentage points QoQ. Following the lightweighting trend in the industry, the company is expected to achieve growth in both volume and price. Volume: The company is actively expanding its customer base. In September 2024, the company received a nomination for magnesium alloy reducer housing products for NEVs, with mass production expected to begin in June 2025 and total sales from 2025 to 2027 estimated at 170 million yuan. Price: The company is focusing on the continuous transition to medium and large components. It has successfully developed and mass-produced medium and large magnesium alloy components such as powertrain housings, display backplates, and center console frames, with their average price being 4-5 times that of standard magnesium alloy castings. Risk warnings: Risks of declining production and sales scale of downstream customers; intensified competition in the magnesium alloy industry; product price decline risks; exchange rate fluctuation risks.

Southwest Securities released a research report on October 31, giving Xingyuan Zhumag a "Buy" rating. The main reasons for the rating include: 1) Q3 revenue continued to hit new highs, while profits faced short-term pressure; 2) gross margin showed slight QoQ improvement, while net margin declined, and R&D expense ratio remained stable; 3) convertible bond projects support capacity expansion, and nominated projects are opening up the magnesium alloy market. Risk warnings: Significant raw material price increases; weaker-than-expected downstream demand; macroeconomic downturn risks; slower-than-expected progress in fundraising projects; and lower-than-expected volume growth of major magnesium alloy products.