BAOWU MAGNESIUM(SZ:002182) EBSCN·2025-07-30 10:20Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [5]. Core Views - The company's performance is negatively impacted by declining magnesium prices, with projected revenues of 8.983 billion and 10.110 billion for 2024 and 2025 respectively, representing year-on-year growth of 17.39% and 12.55%. However, net profits are expected to decrease significantly, with a forecast of 1.6 billion and 0.28 billion for the same periods, reflecting a decline of 47.91% and 53.58% [1]. - The magnesium-aluminum price ratio has remained below 1 for nearly 11 months, indicating a growing application space for lightweight materials in the automotive sector. Major automotive manufacturers are increasing their use of magnesium products, with potential usage in vehicles expected to rise significantly in the future [1]. - The company has established a comprehensive supply chain from mining to magnesium alloy production, ensuring raw material supply and cost efficiency. Current production capacities include 100,000 tons of raw magnesium and 200,000 tons of magnesium alloy, with additional capacity expansions planned [3]. Summary by Sections Financial Performance - The company is projected to achieve revenues of 89.83 billion and 20.33 billion in Q1 of 2024 and 2025, with respective year-on-year growth rates of 17.39% and 9.08%. However, net profits are expected to decline to 1.6 billion and 0.28 billion, down 47.91% and 53.58% [1]. - The forecast for net profit for 2025-2026 has been revised downwards to 2.11 billion and 2.83 billion, reflecting a decrease of 64.7% and 68.1% respectively, with a new projection for 2027 at 4.23 billion [3]. Market Trends - The magnesium price has decreased by 17.2% since the beginning of 2024, with the current price at 18,210 yuan per ton [1]. - The magnesium-aluminum price ratio is currently at 0.90, indicating a shift towards magnesium in automotive applications, with significant penetration from companies like Seres and Geely [1]. Industry Position - The company benefits from an integrated layout that includes mining, raw magnesium smelting, and magnesium alloy production, which helps in securing raw material supply and reducing production costs [3]. - The company has significant resource reserves, with subsidiaries holding substantial quantities of dolomite resources, ensuring long-term supply stability [3].