V-Test(SH:688372) Zhong Guo Jing Ji Wang·2024-10-21 02:00Core Viewpoint - Zhenghai Magnetic Materials (300224.SZ) is planning to optimize and shrink its electric motor drive system business due to continuous losses, which have significantly impacted the company's overall performance [1][2]. Group 1: Business Overview - Zhenghai Magnetic Materials entered the electric motor drive system sector through the acquisition of Shanghai Dajun Power Control Technology Co., Ltd. in 2014, viewing it as a second growth curve [1][2]. - Shanghai Dajun, established in 2005, focuses on the research, production, and sales of electric motor drive systems and related technologies [1]. - The company initially aimed to diversify its revenue streams by combining high-performance neodymium-iron-boron permanent magnet materials with electric motor drive systems [1][2]. Group 2: Financial Performance - Since 2020, the electric motor drive system business has been consistently losing money, with revenue contribution remaining below 2%, leading to significant operational challenges for the company [1][3]. - Shanghai Dajun's net profits from 2018 to 2024 have shown continuous losses, with figures such as -40.29 million, -105.26 million, and -33.58 million [3]. - In contrast, the high-performance neodymium-iron-boron permanent magnet materials business has seen revenue growth, reaching a peak of 6.228 billion in 2022, although it declined to 5.77 billion in 2023 due to falling raw material prices [3]. Group 3: Strategic Response - The company is authorizing its management to determine strategies for optimizing and shrinking the electric motor drive system business in light of its current operational status and future industry development plans [2]. - The decision to restructure comes after the realization that the electric motor drive system business is facing severe competition and market challenges, including vertical integration by automakers and aggressive pricing strategies [1][2].