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On July 30th, Cailian Press News (Reporter Wu Chao) Due to the drag of falling magnesium prices, Baowu Magnesium Technology (002182.SZ), the domestic leader in the magnesium industry, saw its net profit decline again in the first half of this year, after a nearly 50% drop in net profit last year.

Baowu Magnesium Technology released an announcement tonight, stating that the company achieved a revenue of 4.075 billion yuan in the first half of the year, a year-on-year increase of 15.37%, mainly due to the growth of product sales volume; the net profit attributable to shareholders of the listed company was 0.12 billion yuan, a year-on-year decrease of 1.28%, mainly due to the decrease in product sales prices.

Industry data shows that in the first half of the year, magnesium prices were relatively low. In June 2024, the average price of magnesium ingots in China was 19,970 yuan/ton, while the average price of magnesium ingots in 2023 was 23,680.58 yuan/ton.

However, the company also believes that as magnesium prices bottom out and even approach or fall below the price of aluminum, it will be more favorable for the expansion of downstream applications such as large parts in automobiles, magnesium-based hydrogen storage, integrated casting of automotive magnesium alloys and construction templates, and will further increase downstream customers' enthusiasm for using magnesium.

Regarding business layout, Baowu Magnesium Technology's sales business in foreign countries has shrunk more than domestically. In the first half of the year, foreign sales business achieved a revenue of 0.654 billion yuan, a year-on-year decrease of 4.47%, and the gross profit margin was 0.82%, a decrease of 2.54 percentage points year-on-year.

In contrast, subsidiary Ruibao Metal (Hong Kong) Co., Ltd. is responsible for overseas sales of products, and achieved a net profit of 3.8577 million yuan in the first half of the year, compared with 13.3661 million yuan in the same period last year.

In addition, as one of Baowu Magnesium Technology's three major original magnesium supply bases and four major magnesium alloy supply bases, Chaohu Baomag achieved a net profit of 11.509 million yuan in the first half of this year, compared with 56.1792 million yuan in the same period last year, a decrease of 44.6702 million yuan year-on-year, which is the largest decline in profits among Baowu Magnesium Technology subsidiary companies.

In terms of cash flow, Baowu Magnesium Technology had a net cash outflow of 31.6907 million yuan in the first half of the year, a year-on-year decrease of 151.07%. Among them, operating cash flow was 0.12 billion yuan, a year-on-year decrease of 59.08%, mainly due to a decrease in customer receipts and an increase in inventories compared to the same period last year.

In terms of production capacity construction, the company is currently expanding its original magnesium production capacity by 0.05 million tons in Chaohu, expanding its original magnesium production capacity by 0.1 million tons in Wutai, and expanding its original magnesium production capacity by 0.3 million tons in Qingyang. Among them, the Chaohu Yunhai expansion project will be put into operation in the second half of 2024, and the Wutai Yunhai expansion project is under construction. After all expansion projects in various regions reach production capacity, the production capacity of original magnesium and magnesium alloys will reach 0.5 million tons.