SMM February 21 News:
The stock price of Baowu Magnesium rose on February 21. As of 13:17 on the 21st, Baowu Magnesium was up 0.71%, trading at 12.77 yuan per share.
According to China Baowu, on the morning of February 20, the second Party Congress of the Communist Party of China Baowu Steel Group Corporation was grandly opened at the Golden Furnace·China Baowu Steel Conference and Exhibition Center. Hu Wangming, Secretary of the Party Committee and Chairman of China Baowu, delivered a report titled "Upholding the Great Banner, Courageously Undertaking Mission and Responsibility, Fully Accelerating the Construction of a World-Class Enterprise, and Striving to Write a New Chapter in the High-Quality Development of China Baowu" on behalf of the first Party Committee of China Baowu. Hu Wangming's report was divided into four parts. In the fourth part of the report, Hu emphasized, deepening reform comprehensively, strengthening innovative development, and accelerating the construction of a world-class enterprise. We must resolutely follow the world-class enterprise standards proposed by General Secretary Xi Jinping, which include "excellent products, outstanding brands, leading innovation, and modern governance," and implement the new requirements and tasks of the Central Committee regarding the "three overall goals," "two approaches," "three roles," and "three pioneers" for state-owned enterprises. Adhering to the development directions of "market-oriented, law-based, and internationalized" principles, and the strategic path of "strengthening through innovation, optimizing through efficiency, and expanding through entrepreneurship," we will accelerate the construction of a world-class enterprise. Our vision is to become a world-class enterprise in the steel and lightweight metal materials industry; our mission is to co-build a steel ecosystem and co-create a green new future; our values are integrity, innovation, green development, and collaboration. Our development strategy is summarized as "12345" : focusing on one overarching goal, "strengthening, optimizing, and expanding to build a world-class enterprise"; leveraging two core drivers, "reform" and "innovation," to enhance strategic support capabilities, continuously strengthen core functions, and improve core competitiveness; focusing on three strategic priorities, "strengthening the steel foundation, synergizing towards innovation, and expanding overseas," to better play the roles of industrial control, technological innovation, and safety support. Adhering to four development directions, striving to achieve "high-end, intelligent, green, and efficient" development. Strengthening five guarantees, namely "adhering to Party leadership and enhancing modern governance; adhering to innovation-driven development and strengthening talent; adhering to reform and opening up and enhancing market capabilities; adhering to ecological collaboration and strengthening value creation; adhering to compliance and strengthening risk control." Our long-term goal is to achieve "54321" by 2035 , which means achieving an R&D intensity of 5%, advanced steel materials accounting for 40% of revenue, a 30% reduction in carbon emissions per ton of steel, a transnational index of 20%, and a return on equity (ROE) of 10%.
Leaving the venue, the representatives were filled with enthusiasm, sharing their insights, experiences, and visions based on the conference report: from the company's new vision, mission, and values to the "12345" development strategy and "54321" long-term goal, from leveraging the two core drivers of "reform" and "innovation" to the overarching goal of "strengthening, optimizing, and expanding to build a world-class enterprise," phrases like "greatly inspired," "full of confidence," and "highly motivating" became frequent expressions among the representatives, instilling confidence and anticipation for the future development of China Baowu.
Wang Qiangmin, Secretary of the Party Committee and Chairman of Baosteel Metal, and Secretary of the Party Committee and General Manager of Baowu Magnesium, stated, "The successful convening of the second Party Congress of China Baowu not only outlined a grand blueprint for the future development of China Baowu but also pointed the way forward for Baosteel Metal and Baowu Magnesium, inspiring us to forge ahead. Baosteel Metal and Baowu Magnesium will integrate the spirit of this conference into their practical work. First, with the vision of 'becoming a global leader in the magnesium industry,' we will accelerate the development of the entire magnesium industry chain. The conference clarified that China Baowu's vision is 'to become a world-class enterprise in the steel and lightweight metal materials industry.' As the group's sole development platform for the magnesium-based new materials industry, Baowu Magnesium will resolutely implement the group's strategic deployment, actively optimize the magnesium industry layout, accelerate the development of the entire magnesium industry chain, and strive to become a 'lightweight solutions provider and the main force of China Baowu's new materials.' Second, with technological innovation at the core, we will firmly pursue the 'four modernizations' development. The conference pointed out that the 'four modernizations' development is the directional guide for the group's construction of a world-class enterprise. As a strategic emerging industry, magnesium-based new materials are a typical representative of new productive forces. Baowu Magnesium will unwaveringly follow the 'four modernizations' development direction, intensify technological innovation, accelerate the enhancement of core competitiveness, lead industry development, and serve national strategies. Third, we will accelerate mechanism innovation and promote integrated development. As a mixed-ownership enterprise, Baowu Magnesium will further strengthen Party leadership and Party building, improve governance systems and capabilities, adhere to the 'four principles' of operation, deepen accounting-based management, and refine market-oriented systems and mechanisms. We will continue to establish and improve management systems to ensure compliance and strengthen risk control. The new era calls for new actions, and the new mission requires new responsibilities. The cadres and employees of Baosteel Metal and Baowu Magnesium will take the spirit of this conference as their guide, strengthen their confidence, and work diligently to contribute to China Baowu's accelerated construction of a world-class enterprise."
In addition, the record of Baowu Magnesium's survey for specific parties on February 19 shows:
Q: Could you introduce Baowu Magnesium?
Baowu Magnesium responded: The company was established in 1993 and listed in 2007. It is a high-tech enterprise integrating mining, non-ferrous metal smelting, and recycling processing. Its main business includes the production, deep processing, and sales of magnesium and aluminum alloy materials. The main products include magnesium alloys, magnesium alloy die castings, aluminum alloys, aluminum extrusion micro air-conditioning flat tubes, aluminum extrusion automotive structural parts, intermediate alloys, and metallic strontium. These products are primarily used in automobiles, e-bikes, consumer electronics, and construction. The company has a complete industry chain of "dolomite mining - primary magnesium smelting - magnesium alloy melting - precision casting and deformation processing of magnesium alloys - magnesium alloy recycling," which optimizes the cost structure of its products and enhances its risk resistance capability, ensuring stable product supply to customers.
Q: To which countries are the company's magnesium products mainly exported?
Baowu Magnesium responded: The company's magnesium products are mainly exported to Europe, North America, and Southeast Asia.
Q: What is the impact of magnesium prices being lower than aluminum prices on the company?
Baowu Magnesium responded: As magnesium prices fall below aluminum prices, it presents a great opportunity for the magnesium industry. It is particularly beneficial for downstream applications such as large automotive parts, integrated magnesium alloy die-cast parts for vehicles, robots, and construction templates, further increasing the willingness of downstream customers to use magnesium. Previously, we promoted magnesium applications from a performance perspective; now, we can also promote them from a cost perspective.
Q: What measures does the company take to promote magnesium applications?
Baowu Magnesium responded: We aim to reduce magnesium production costs and enhance cost competitiveness. We have established technical and marketing teams in various fields, including automotive, 3C, construction templates, magnesium hydrogen storage, low-altitude economy, and robotics, to deeply engage in product design stages with customers, providing comprehensive design services and leading the application of new materials. We are also increasing innovation and development capabilities in magnesium product varieties, production technologies, and applications to meet performance requirements.
Q: What are the applications of magnesium alloys in the robotics field?
Baowu Magnesium responded: Magnesium alloys empower the robotics industry with four major advantages: "lightweight, fast, stable, and efficient," aiming to showcase stronger competitiveness and bring lightweight, high-efficiency, and fast-response solutions to the industrial automation field.
As Baowu Magnesium has not yet released information on its 2024 performance, a review of its Q3 report shows: In the first three quarters, the company achieved operating revenue of 6.347 billion yuan, up 14.09% YoY; net profit attributable to shareholders was 154 million yuan, down 25.88% YoY. During the reporting period, Baowu Magnesium's basic earnings per share were 0.155 yuan, and the weighted average return on equity was 2.88%. According to Baowu Magnesium's Q3 report, the increase in operating revenue was mainly due to the increase in sales of deep-processed products compared to the same period last year. The decline in net profit was attributed to the decrease in magnesium prices and the resulting decline in the gross profit of magnesium alloy products.
A research report by Galaxy Securities on November 21, 2024, stated that central state-owned enterprises in the non-ferrous metals sector bear the responsibility of ensuring national resource security and promoting the high-quality development of China's non-ferrous metals industry through transformation and upgrading. Under the national development requirements and policy support, the resource expansion, breakthroughs in new materials, and mergers and acquisitions of central state-owned enterprises in the non-ferrous metals sector bring growth expectations and demonstrate good growth potential. With the continuous upgrading of assessment indicators for central state-owned enterprises, the enhancement of profitability, cost control, and asset structure improvement under the "one profit and five rates" framework will lead to improved operational quality and performance growth. Additionally, as central state-owned enterprises strengthen market value management, increased dividend payouts will enhance investment returns, and the pace of injecting high-quality mining resource assets by major shareholders is expected to accelerate, potentially expanding valuations. It is recommended to focus on leading central state-owned enterprises in various strategic metal segments of China's non-ferrous metals industry, including Zijin Mining, Chalco, Shandong Gold, Zhongjin Gold, China Rare Earth, Salt Lake Co., Baowu Magnesium, and GRINM.
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