BAOWU MAGNESIUM(002182) 民生证券·2024-08-01 05:33Investment Rating - The report maintains a "Recommend" rating for Baowu Magnesium (002182 SZ) [2][29] Core Views - Baowu Magnesium achieved revenue of 4 075 billion yuan in H1 2024, a year-on-year increase of 15 4%, while net profit attributable to the parent company decreased by 1 3% to 120 million yuan [2] - In Q2 2024, revenue reached 2 212 billion yuan, up 20 3% year-on-year and 18 7% quarter-on-quarter, with net profit attributable to the parent company declining by 16 5% year-on-year and 2 7% quarter-on-quarter to 59 million yuan [2] - The company's magnesium alloy and aluminum deep-processing products contributed to a quarter-on-quarter gross profit increase of 40 33 million yuan, despite a decline in magnesium prices [2] - The Qingyang project, which started production at the end of 2023, is expected to ramp up capacity, supporting future growth [2] Financial Performance H1 2024 Performance - Revenue: 4 075 billion yuan (+15 4% YoY) [2] - Net profit attributable to the parent company: 120 million yuan (-1 3% YoY) [2] - Gross profit increased by 68 92 million yuan, driven by higher production and sales volumes [14] Q2 2024 Performance - Revenue: 2 212 billion yuan (+20 3% YoY, +18 7% QoQ) [2] - Net profit attributable to the parent company: 59 million yuan (-16 5% YoY, -2 7% QoQ) [2] - Magnesium prices declined, with magnesium ingot and magnesium alloy prices down 5 1% quarter-on-quarter and 19 9%/20 2% year-on-year, respectively [16] Subsidiary Performance - Wutai Yunhai remained the most profitable subsidiary, with net profit increasing by 3 74 million yuan to 79 38 million yuan in H1 2024 [24] - Chaohu Yunhai reported a net loss of 11 51 million yuan due to higher costs [24] - Nanjing Yunhai Aluminum's net profit increased by 17 04 million yuan to 22 20 million yuan [24] Key Highlights - The company has significant resource advantages, with three magnesium alloy production bases equipped with dolomite mining rights [26] - Capacity expansion projects, including Qingyang, Chaohu, and Wutai, are expected to bring total magnesium and magnesium alloy production capacity to 500,000 tons each by 2025 [27] - A planned 300,000-ton ferrosilicon project will further enhance cost advantages by achieving self-sufficiency in ferrosilicon for the Qingyang project [27] - The magnesium-to-aluminum ratio averaged 1 04 in H1 2024, below the reasonable range of 1 1-1 3, indicating increased downstream acceptance and diversified magnesium applications [27] Profit Forecast - The report forecasts net profit attributable to the parent company of 361 million yuan, 732 million yuan, and 951 million yuan for 2024, 2025, and 2026, respectively [29] - EPS is projected to be 0 36 yuan, 0 74 yuan, and 0 96 yuan per share for 2024, 2025, and 2026, respectively [29] - The PE ratios based on the closing price on July 31, 2024, are 28X, 14X, and 11X for 2024, 2025, and 2026, respectively [29]