BSU(600010) 国金证券·2025-04-05 13:10Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 3.21 RMB based on a PE of 51x for 2025, which is significantly lower than the average of comparable companies [3]. Core Viewpoints - The company, Baogang Co., is a well-established state-owned enterprise that has diversified into "steel + rare earth resources," controlling significant resources in Baiyun Obo [1][10]. - The rare earth industry is expected to see improved supply and demand dynamics due to regulatory changes and geopolitical factors, which will likely increase prices [1][27]. - The steel business is anticipated to reduce losses and lessen the drag on the rare earth segment, benefiting from industry-wide improvements in profitability [2][52]. Summary by Sections Company Overview - Baogang Co. was established in 1954 and is a leading steel producer in Inner Mongolia, with a production capacity of 17.5 million tons [10][12]. - The company has a stable ownership structure, with the largest shareholder being Baotou Iron and Steel Group, controlled by the Inner Mongolia government [15]. Rare Earth Industry - The implementation of the "Rare Earth Management Regulations" is expected to enhance domestic control over rare earth resources and improve market conditions [27][30]. - Ongoing supply disruptions from Myanmar are likely to elevate prices for rare earth elements, with projections indicating an average price for praseodymium and neodymium oxide to exceed 450,000 RMB per ton by 2025 [1][37]. Rare Earth Business - Baogang Co. possesses substantial rare earth resources, with reserves ranking second globally at approximately 13.82 million tons [17][44]. - The pricing mechanism for rare earth products is linked to market prices, allowing the company to benefit from price increases [46][50]. Steel Business - The company has a diversified steel production capacity, with a self-supply ratio of iron ore close to 40%, and is expected to improve profitability as the steel industry recovers [2][52]. - The steel segment has historically impacted the rare earth business negatively, but improvements in the steel market are projected to enhance overall profitability [2][52]. Profit Forecast and Valuation - Revenue forecasts for 2024-2026 are 65.5 billion, 61.7 billion, and 63.5 billion RMB, with net profits expected to rise significantly by 2026 [3][6].