BAOWU MAGNESIUM(002182) 东方证券·2024-07-04 03:02Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 12.48 CNY based on a 16X PE for 2025 [29][32]. Core Insights - Magnesium prices are at a low, enhancing cost-effectiveness. As of June 2024, the average price of magnesium ingots in China is 19,970 CNY/ton, while aluminum is 20,584 CNY/ton, resulting in a magnesium-to-aluminum ratio of 0.98, the lowest since 2010. This price dynamic is expected to boost downstream applications such as automotive components and construction materials [28]. - The company is advancing its upstream projects to ensure a stable supply of raw materials. Baowu Magnesium Industry holds a leading global market share in magnesium and magnesium alloy products, with a complete industrial chain from limestone mining to magnesium alloy recycling [28]. - The report anticipates a recovery in earnings, projecting EPS of 0.50, 0.78, and 1.17 CNY for 2024, 2025, and 2026, respectively, reflecting adjustments in magnesium price assumptions and project investment returns [29][31]. Financial Summary - The company's revenue is projected to decline from 9,105 million CNY in 2022 to 7,652 million CNY in 2023, followed by a recovery to 8,863 million CNY in 2024, and further growth to 11,499 million CNY in 2025 and 13,750 million CNY in 2026, indicating a compound annual growth rate (CAGR) of 19.6% from 2024 to 2026 [31]. - The net profit attributable to the parent company is expected to decrease from 611 million CNY in 2022 to 306 million CNY in 2023, before rebounding to 496 million CNY in 2024, 772 million CNY in 2025, and 1,159 million CNY in 2026, reflecting a significant growth trajectory [31]. - Key financial ratios indicate a gross margin of 16.1% in 2022, expected to decline to 13.4% in 2023, and then gradually improve to 15.5% by 2026 [31].