宝武镁业：镁价下跌影响利润，积极拓展下游应用

Investment Rating - The investment rating for the company is "Outperform the Market" [4][17]. Core Views - The company's net profit for Q1-Q3 2024 decreased by 26% year-on-year, with revenue reaching 6.35 billion yuan, an increase of 14.1%. The decline in profit is primarily attributed to falling magnesium prices, which dropped from an average of 30,655 yuan/ton in 2022 to 18,000 yuan/ton in Q3 2024 [1][6]. - The company is in a phase of accelerated capacity expansion, with plans to build new production facilities that will increase its total capacity to 550,000 tons of raw magnesium and 600,000 tons of magnesium alloys [1][2]. - The price of magnesium has returned to a reasonable range, enhancing its cost-effectiveness compared to aluminum, which is expected to open new opportunities in various applications such as solid-state energy storage and automotive components [2][16]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company achieved a revenue of 6.35 billion yuan (+14.1%) and a net profit of 154 million yuan (-25.9%). The operating cash flow was 58 million yuan, down 73.5% [1][6]. - The average price of magnesium ingots has significantly decreased, impacting profitability [1][6]. Capacity Expansion - The company currently has over 100,000 tons of raw magnesium capacity and 200,000 tons of magnesium alloy capacity, with ongoing projects to further increase production [1][2]. - New projects include 50,000 tons of raw magnesium capacity in Chao Lake and 300,000 tons in Qingyang [1][2]. Market Outlook - The magnesium price has dropped to approximately 0.9 times that of aluminum, highlighting its competitive advantage [2][16]. - The company has established multiple partnerships with major automotive manufacturers, indicating a positive outlook for magnesium alloy applications [2][17]. Profit Forecast - The profit forecast for 2024-2026 has been adjusted, with expected net profits of 287 million yuan, 477 million yuan, and 734 million yuan respectively, reflecting a year-on-year growth rate of -6.5%, 66.6%, and 53.7% [2][17]. - The diluted EPS is projected to be 0.40 yuan, 0.67 yuan, and 1.04 yuan for the respective years, with corresponding PE ratios of 26x, 15x, and 9x [2][17].