BAOWU MAGNESIUM(002182)2024-11-01 07:14Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [4][13]. Core Views - The company's revenue for the first three quarters of 2024 reached 6.347 billion yuan, a year-on-year increase of 14.1%, while the net profit attributable to shareholders was 154 million yuan, a year-on-year decrease of 25.9% [1][2]. - The company is advancing its complete magnesium industry chain, with significant production capacity expected from its six magnesium alloy automotive die-casting bases [2]. - The profitability is currently impacted by declining magnesium prices, but there is an expectation for improvement as the company expands its deep processing business and as magnesium prices stabilize [2][3]. Financial Performance Summary - For Q3 2024, the company achieved revenue of 2.271 billion yuan, a year-on-year increase of 11.9% and a quarter-on-quarter increase of 2.7% [1][2]. - The gross profit margin for the first three quarters was 11.48%, with a Q3 margin of 10.8%, reflecting a decrease due to lower raw magnesium prices [2]. - The average price of magnesium ingots in Q3 was 20,140 yuan per ton, showing a slight increase of 0.37% from the previous quarter [2]. Industry Insights - The magnesium industry is undergoing a supply-side restructuring, with China supplying over 80% of the world's raw magnesium, but facing short-term supply constraints due to environmental regulations [2]. - The demand for magnesium alloys is expected to grow significantly, particularly in the automotive sector, with a projected compound annual growth rate (CAGR) of 54% from 2023 to 2026 [2]. - The report emphasizes the historical opportunity for magnesium to evolve from a "small" metal to a "large" metal, driven by diverse demand and the company's capacity expansion [2].