Rising magnesium prices support performance, Yunhai Metal's net profit increased by more than 90% in

On the evening of July 25, Yunhai Metal released its 2019 semi-annual report. The report shows that the company achieved revenue of 2.464 billion yuan in the first half of this year, a year-on-year increase of 0.89%; attributable net profit was 278 million yuan, a year-on-year increase of 91.08%; basic earnings per share was 0.4297 yuan, a year-on-year increase of 91.06%. During the reporting period, the company's performance growth was mainly due to the increase in magnesium prices being higher than the increase in raw material prices, and the receipt of government demolition subsidies, resulting in an increase in non-recurring profits and losses.

It is understood that Yunhai Metal has a complete industrial chain from mining to raw magnesium smelting to magnesium alloys to deep-processed products. It can optimize the cost of magnesium alloys and maximize profits, and can stably provide customers with various products and ensure quality. In recent years, the company has gradually accelerated the development of its midstream and downstream industries, forming flagship products such as magnesium alloy steering wheel frames, aluminum alloy micro-channel flat tubes, and magnesium alloy medium and large parts, and its market share has gradually increased.

During the reporting period, the company's magnesium alloy and aluminum alloy products achieved revenue of 850 million yuan and 994 million yuan respectively, accounting for 34.52% and 40.33% of the total revenue, an increase of 36.96% and -18.30% over the same period last year. Among them, because the price of magnesium has increased faster than the price of raw materials, the gross profit margin of the company's magnesium alloy products was 19.67%, an increase of 6.44% from the same period last year. At the same time, benefiting from the decline in the cost of raw magnesium, the company's operating costs during the reporting period were 2.049 billion yuan, a year-on-year decrease of 2.46%.

Yunhai Metal said that in recent years, aluminum and magnesium prices have fluctuated to a certain extent due to macroeconomic factors. If the prices of the company's main raw materials continue to fluctuate significantly in the future, it will put certain pressure on the company's cost control. In this regard, the company signs long-term contracts with strategic suppliers of raw materials or uses transparent procurement methods such as bidding; sales pricing considers the impact of raw material price fluctuations; and rationally controls raw material and product inventory to control costs.

In addition, on June 6 this year, the company announced the expansion of production of 300,000 tons of ferrosilicon and 100,000 tons of aluminum master alloy. Baotou Yunhai, a subsidiary of the company, plans to invest 800 million yuan of its own funds to build a ferrosilicon alloy project with an annual output of 300,000 tons. After the project reaches full production, it is expected to achieve an annual net profit of 130 million yuan. The reporter learned that ferrosilicon is the raw material for the production of raw magnesium, and the cost of ferrosilicon accounts for a large proportion of the production cost of raw magnesium. According to the analysis of the Industrial Securities research report, the company currently has a ferrosilicon production capacity of 16,000 tons. Compared with the original magnesium production capacity of 150,000 tons, the raw material self-sufficiency rate is only about 10%. An additional 300,000 tons of ferrosilicon production capacity will achieve the goal of raw magnesium. The ferrosilicon self-sufficiency rate exceeds 200%, which will also effectively reduce the impact on profitability caused by ferrosilicon price fluctuations.

At the same time, the company plans to jointly invest 300 million yuan with Xinfa Group to build an aluminum master alloy project with an annual output of 100,000 tons in Liaocheng, Shandong. After reaching production, the annual profit is expected to be 73.88 million. To implement this project, the two parties plan to establish a new Yunxin Aluminum Co., Ltd. The registered capital is 200 million yuan, of which Yunhai Metal invested 102 million yuan, accounting for 51%. By cooperating with Xinfa Group this time, the company will achieve complementary advantages in raw materials, energy, and technology, which can further reduce product production costs and expand product market share.

Benefiting from the decrease in product costs compared with the same period last year, the increase in magnesium prices during the reporting period, the increase in raw magnesium profits, and the company's relocation compensation, Yunhai Metal is expected to achieve an attributable net profit of 480 million yuan to 520 million yuan from January to September 2019. , an increase of 93.83%-109.98% compared with the same period last year; among which, the expected change range of attributable net profit from July to September 2019 is 97%-136%.