Market Overview - Hong Kong stocks surged today, with all three major indices rising over 2%. The Hang Seng Index increased by 2.3% or 532.38 points, closing at 23640.65 points, with a total turnover of 2228.41 million HKD [1] - The positive sentiment in the market is attributed to the unexpected progress in the first round of trade negotiations between China and the US, which is expected to continue in a constructive direction [1] Blue-Chip Stocks Performance - JD Health (06618) saw a notable increase of 5.13%, closing at 39.95 HKD, contributing 3.56 points to the Hang Seng Index. The company reported Q1 2025 revenue of 16.645 billion RMB, a year-on-year growth of 25.5%, and operating profit of 1.071 billion RMB, up 119.8% [2] - Other blue-chip stocks included China Life (02628) rising by 6.55% to 16.26 HKD, AIA (01299) up 5.15% to 65.3 HKD, while Link REIT (00823) fell by 1.34% to 40.45 HKD [2] Sector Performance - Large technology stocks collectively rose, with Baidu increasing over 4% and Alibaba and JD both rising over 3% [3] - Financial stocks experienced a significant rally, with China Pacific Insurance (02601) up 6.77% to 24.45 HKD, China Life (02628) up 6.55%, and GF Securities (01776) up 6.31% to 11.46 HKD [3] Shipping Sector - The shipping sector performed well, with Pacific Basin Shipping (02343) rising by 7.78% to 1.94 HKD and Seafront International (01308) up 6.51% to 22.9 HKD. The improvement is linked to the easing of tariff conflicts and a seasonal increase in container shipping demand [4][5] Automotive Sector - The automotive sector saw widespread gains, with Li Auto (02015) rising by 4.54% to 112.8 HKD and Xpeng Motors (09868) up 3.87% to 81.8 HKD. The retail sales of new energy passenger vehicles reached 905,000 units in April, a year-on-year increase of 33.9% [6][5] Coal Sector - The coal sector showed positive movement, with China Coal Energy (01898) up 4.91% to 8.55 HKD. Despite recent price declines, analysts suggest that demand may improve as summer approaches [7] Notable Stock Movements - Tencent Music (01698) surged by 12.84% to 61.5 HKD, reporting Q1 2025 revenue of 7.36 billion RMB, with online music service revenue growing by 15.9% [8] - Smoore International (06969) reached a new high, increasing by 10.18% to 17.32 HKD, amid rising sales of new tobacco products [9] - MicroPort Scientific (02252) saw a decline of 8.12% to 16.52 HKD due to a share placement announcement [10] - Samsonite (01910) dropped by 8.58% to 14.06 HKD after reporting a 7.3% decrease in net sales for Q1 2025 [11]

Investment Rating - The report maintains an investment rating of "Positive" for the steel industry, consistent with the previous rating [3]. Core Insights - The report highlights that daily pig iron production remains high, with an average of 2.4564 million tons as of May 9, reflecting a week-on-week increase of 0.22 million tons and a year-on-year increase of 149,700 tons [5][6]. - The steel market has shown a positive performance, with the steel sector rising by 2.09%, outperforming the broader market [5][13]. - The report indicates a marginal improvement in downstream demand, supported by increased funding availability for construction projects, which is expected to bolster steel demand [6]. Summary by Sections 1. Market Performance - The steel sector increased by 2.09%, with sub-sectors such as special steel up by 3.41% and long products up by 1.90% [5][15]. - The average capacity utilization rate for blast furnaces was 92.1%, a week-on-week increase of 0.09 percentage points [28]. 2. Production Data - As of May 9, the total production of five major steel products was 7.64 million tons, a week-on-week decrease of 93,600 tons, or 1.21% [27]. - Daily pig iron production was reported at 2.4564 million tons, with a year-on-year increase of 6.49% [28]. 3. Consumption Data - The consumption of five major steel products was 8.452 million tons, a week-on-week decrease of 125,660 tons, or 12.94% [38]. - The transaction volume of construction steel by mainstream traders was 103,000 tons, down 8.58% week-on-week [38]. 4. Inventory Levels - Social inventory of five major steel products reached 10.33 million tons, a week-on-week increase of 93,500 tons, or 0.91% [46]. - Factory inventory of five major steel products was 4.43 million tons, a week-on-week increase of 19.62%, or 4.63% [46]. 5. Price Trends - The comprehensive index for ordinary steel was 3,453.7 yuan/ton, a week-on-week decrease of 37.38 yuan/ton, or 1.07% [52]. - The comprehensive index for special steel was 6,650.3 yuan/ton, with a slight week-on-week increase of 2.55 yuan/ton [52]. 6. Profitability - The average cost of pig iron was reported at 2,297 yuan/ton, with a week-on-week decrease of 6.0 yuan/ton [60]. - The profit per ton for rebar produced in blast furnaces was 90 yuan/ton, a week-on-week decrease of 38.0 yuan/ton [60]. 7. Investment Recommendations - The report suggests focusing on regional leading enterprises with advanced equipment and environmental standards, as well as companies benefiting from the new energy cycle [6].

Group 1 - The core viewpoint of the articles highlights the performance of the China Securities Hong Kong 300 Energy Index, which has seen a decline of 7.31% in the past month, 8.77% in the past three months, and 10.93% year-to-date [1] - The top ten holdings of the China Securities Hong Kong 300 Energy Index include China National Offshore Oil (41.44%), PetroChina (17.49%), China Shenhua Energy (13.95%), Sinopec (13.62%), and others, indicating a concentration in a few major companies [1] - The index is designed to reflect the overall performance of different industries in the Hong Kong market, with a base date of December 31, 2004, set at 1000.0 points [1] Group 2 - The market segments represented in the China Securities Hong Kong 300 Energy Index are entirely from the Hong Kong Stock Exchange, with fuel refining accounting for 42.01%, integrated oil and gas companies for 31.12%, and coal for 24.17% [2] - The index samples are adjusted biannually, with changes implemented on the next trading day following the second Friday of June and December, ensuring that the weight factors are updated accordingly [2] - Adjustments to the index samples occur in response to special events affecting the companies, such as mergers or delistings, ensuring the index remains reflective of the current market landscape [2]

Financial Performance - For the year ended December 31, 2024, the revenue decreased by 14% to HK$5,057 million compared to HK$5,891 million in 2023[20] - Gross profit for the same period fell by 25% to HK$2,588 million, with a gross profit margin of 51%, down from 59% in 2023[20] - Profit attributable to owners of the Company decreased by 21% to HK$1,494 million, compared to HK$1,889 million in 2023[20] - EBITDA for 2024 was HK$3,088 million, reflecting a 21% decline from HK$3,924 million in 2023[20] - The Group's net profit for 2024 was HK$1.81 billion, with net profit attributable to shareholders amounting to HK$1.49 billion, a decrease of 21% from the previous year[57] - Basic earnings per share decreased to HK30.12 cents, down approximately 20% YoY, consistent with the decrease in profit attributable to the owners[86] - The Group's net profit for the year was approximately HK$1,815 million, a decrease of approximately 21% YoY, primarily due to a drop in gross profit by approximately HK$878 million or 25% YoY[81] Assets and Liquidity - The total assets as of December 31, 2024, increased by 2% to HK$22,949 million from HK$22,492 million in 2023[22] - Cash and cash equivalents rose by 16% to HK$9,181 million, up from HK$7,945 million in 2023[22] - The current ratio improved by 7% to 4.25 times in 2024, compared to 3.97 times in 2023[22] - The Group maintained a healthy financial position with free bank balances and cash of approximately HK$9,181 million as of 31 December 2024, an increase from HK$7,945 million in the previous year[88] - The Group's current ratio was approximately 4.25 times, with cash and bank deposits totaling approximately HK$10.118 billion as of December 31, 2024[138] - The Group's free cash resources increased by 15% to approximately HK$9.196 billion as of December 31, 2024, compared to approximately HK$8.032 billion as of December 31, 2023[139] Production and Sales - For the year ended December 31, 2024, the Group produced approximately 4.96 million tonnes of raw coking coal, a year-on-year decrease of 6% from 5.25 million tonnes in 2023[70] - The production of clean coking coal was approximately 3.16 million tonnes, representing a year-on-year decrease of 3% from 3.25 million tonnes in 2023[70] - The sales volume of clean coking coal increased by 1% year-on-year, with both 2024 and 2023 fiscal years accounting for 100% of the Group's revenue[74] - The average selling price of clean coking coal decreased by 14% to RMB1,666 per tonne[57] - The average realized selling price of clean coking coal decreased by 14% year-on-year to RMB 1,666 per tonne, down from RMB 1,932 per tonne in 2023[75] - The sales volume of low-sulfur clean coking coal dropped significantly by 95% year-on-year, while medium-high sulfur clean coking coal accounted for 99% of total clean coking coal sales volume[75] Market Conditions - The coking coal market faced weak demand and loose supply conditions in FY 2024, leading to a decline in coal prices to the lowest levels in four years, negatively impacting financial performance[168] - Coking coal prices showed a volatile downward trend, particularly in the latter half of the year, due to sluggish steel demand and low inventory strategies adopted by steel companies[183] - The steel industry achieved a 22.7% year-on-year export growth, helping to mitigate domestic demand shortfalls[182] - China's crude steel output in 2024 was 1.005 billion tonnes, a 1.7% year-on-year decline, while pig iron production fell to 852 million tonnes, down 2.3%[53] - The average selling price of clean coking coal was RMB 1,666 per tonne, down 14% from RMB 1,932 per tonne in the previous year[78] Strategic Initiatives - The Group aims to enhance production management and cost control while increasing production capacity and resources through acquisitions to improve profitability[177] - The Group plans to accelerate the construction of intelligent coal mines and explore innovative applications of AI technology in coal production and operations[64] - The Group aims to deepen strategic initiatives, including technological upgrades, digital management, and smart mine construction to improve production and safety standards[189] - The company plans to shift its production focus from hard coking coal to semi-hard coking coal starting in 2024[37] Dividends and Shareholder Returns - The proposed final dividend per share for 2024 is HK$21.0 cents, an increase of 7% from HK$18.0 cents in 2023[20] - The Group paid total cash dividends of approximately HK$1,396 million during the year, down from approximately HK$2,031 million in the previous year[88] - The Group has proposed a final dividend of 21 Hong Kong cents per ordinary share for 2024, reflecting its commitment to providing stable returns to shareholders[66] Economic Environment - The Chinese economy achieved a GDP growth target of 5.0% in 2024, supported by proactive fiscal and monetary policies[50] - The global economic environment remains challenging, with rising protectionism and tariff barriers likely to depress overall demand in the steel industry[184] - The Chinese government has set a GDP growth target of 5% for 2025, with plans to expand local government special bonds to CNY 4.4 trillion, focusing on infrastructure and resolving local government debts[187] Compliance and Governance - The company has complied with relevant laws and regulations in both the PRC and Hong Kong throughout the reporting period[164] - The Group emphasizes its commitment to environmental, social, and governance (ESG) responsibilities, reflecting its proactive performance in sustainable development[194] - The company was rated Grade A in the "2024 Hong Kong Stock Exchange Listed Companies Energy Sector ESG Performance TOP 10," ranking sixth overall[154]

Investment Rating - The report maintains a "Buy" rating for Shougang Resources, with a target price of HKD 3.19, indicating an expected performance that exceeds the local market index by over 15% [7][8]. Core Views - The significant increase in the sales proportion of high-sulfur coking coal has impacted sales prices, but the pressure is expected to ease in the first half of 2025. The company is projected to maintain a 100% dividend payout ratio for 2024, supported by strong cash flow [2][8]. - The company experienced a decline in total revenue for 2024, amounting to HKD 5.057 billion, a decrease of 14% year-on-year, while net profit fell by 21% to HKD 1.494 billion. This decline is attributed to changes in sales structure, falling coking coal prices, and currency exchange rate impacts [8]. Financial Summary - Revenue and Profit Trends: - Revenue for 2021 was HKD 7,075.82 million, increasing to HKD 8,214.72 million in 2022, before dropping to HKD 5,891.07 million in 2023 and further to HKD 5,057 million in 2024, reflecting a 14.2% decrease [6]. - Net profit followed a similar trend, with HKD 2,538.50 million in 2021, HKD 2,715.37 million in 2022, HKD 1,889.25 million in 2023, and HKD 1,494.07 million in 2024, marking a 20.9% decline [6]. - Production and Sales: - The company anticipates a raw coking coal production of approximately 4.96 million tons in 2024, a decrease of 6%, while the production of premium coking coal is expected to be around 3.16 million tons, down 3% [8]. - The average selling price of premium coking coal is projected to be HKD 1,666 per ton in 2024, a decline of 14% year-on-year [8]. - Dividend and Cash Flow: - The company expects to distribute profits amounting to HKD 1.512 billion in cash for 2024, with a dividend payout ratio of 100%, an increase from 73% in 2023 [8].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 3.40 [6][7]. Core Views - The company reported a revenue of HKD 5.06 billion for 2024, a decrease of 14.2% year-on-year, primarily due to a decline in average selling prices and increased production costs [1][2]. - Despite the revenue decline, the company declared a total dividend of HKD 0.30 per share, an increase of 7.1% year-on-year, with a dividend payout ratio reaching 100% [1][3]. - The company has a strong asset base and stable operations, which supports its high dividend yield of 11.5% [1][3]. Summary by Sections Revenue and Profitability - The company achieved a net profit of HKD 1.49 billion in 2024, down 20.9% year-on-year, with a gross profit margin of 51.2% [5][12]. - The average selling price of premium coking coal fell by 13.8% to HKD 1,666 per ton, which was more significant than the market average decline [2][3]. Production and Costs - The company produced 4.96 million tons of raw coking coal in 2024, a decrease of 5.5% year-on-year, while premium coking coal production was 3.16 million tons, down 2.8% year-on-year [2][3]. - Production costs for raw coal increased by 7% to HKD 429 per ton, influenced by various cost factors including resource taxes and labor [3][20]. Financial Forecasts - The forecast for net profit for 2025 is adjusted to HKD 1.05 billion, reflecting a 39% decrease from previous estimates [4][11]. - The company is expected to maintain a dividend payout ratio of 80% from 2025 to 2035, with a perpetual growth rate assumption of 0% [4][13]. Valuation Metrics - The company’s price-to-earnings (P/E) ratio is projected to be 12.37 for 2025, while the price-to-book (P/B) ratio is expected to be 0.75 [5][20]. - The target price of HKD 3.40 represents a 6.3% increase from the previous target price of HKD 3.20 [11][20].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 3.40 [7][8]. Core Views - The company reported a revenue of HKD 5.06 billion for 2024, a decrease of 14.2% year-on-year, primarily due to a decline in average selling prices and increased production costs [1][2]. - Despite the revenue decline, the company declared a total dividend of HKD 0.30 per share, an increase of 7.1% year-on-year, with a dividend payout ratio reaching 100% [1][2]. - The company has a strong asset base and stable operations, which supports its high dividend yield of 11.5% [1]. Revenue and Profitability - The company achieved a net profit of HKD 1.49 billion in 2024, down 20.9% year-on-year, with a gross profit margin of 51.2% [5][13]. - The average selling price of premium coking coal decreased by 13.8% year-on-year, which was more significant than the market average decline [2][3]. Production and Cost Management - The company produced 4.96 million tons of raw coking coal in 2024, a decrease of 5.5% year-on-year, but production is expected to recover in the second half of 2024 [2][3]. - The production cost of raw coal increased by 7% year-on-year to HKD 429 per ton, influenced by various cost factors including resource taxes and labor [3][4]. Financial Forecast and Valuation - The forecasted net profit for 2025 is adjusted to HKD 1.05 billion, reflecting a 39% decrease from previous estimates [4][12]. - The valuation method has been adjusted to a Dividend Discount Model (DDM), with a conservative assumption of an 80% dividend payout ratio and a target price of HKD 3.40 [4][12]. Key Financial Metrics - The company's earnings per share (EPS) for 2024 is projected at HKD 0.30, with a price-to-earnings (PE) ratio of 8.67 [5][21]. - The return on equity (ROE) is expected to decline to 9.12% in 2024, down from 11.43% in 2023 [5][21].

Group 1 - The company reported a revenue of HKD 5.057 billion for the year ending December 31, 2024, a decrease of 14% year-on-year [1] - The profit attributable to shareholders was HKD 1.494 billion, down 21% year-on-year, with basic earnings per share at HKD 0.3012 [1] - The proposed final dividend is HKD 0.21 per ordinary share [1] Group 2 - The decline in revenue was primarily due to a 14% year-on-year decrease in the average selling price of premium coking coal, which was partially offset by a slight increase of approximately 1% in sales volume [1] - The company's raw coking coal production was approximately 4.96 million tons, a 6% decrease from the previous year, while premium coking coal production was about 3.16 million tons, down 3% year-on-year [1] - The sales of premium coking coal accounted for 100% of the company's revenue, aligning with its long-term strategy focused on premium coking coal sales [1] Group 3 - The company has taken proactive measures to address the impact of coal price fluctuations and quality changes [2] - The sales volume of low-sulfur premium coking coal significantly dropped by 95% year-on-year, with low-sulfur and medium-high sulfur premium coking coal sales accounting for 1% and 99% of total premium coking coal sales, respectively [2] - The average realized price of premium coking coal (including VAT) decreased by 14% to RMB 1,666 per ton, down from RMB 1,932 per ton in the previous year [2]

Financial Performance - For the year ended December 31, 2024, total revenue decreased by 14% to HKD 5,057 million from HKD 5,891 million in 2023[2] - Gross profit fell by 25% to HKD 2,588 million, resulting in a gross margin of 51%, down from 59%[2] - Net profit attributable to owners decreased by 21% to HKD 1,494 million compared to HKD 1,889 million in the previous year[2] - EBITDA declined by 21% to HKD 3,089 million from HKD 3,924 million in 2023[2] - The company reported a decrease in total comprehensive income to HKD 1,398 million from HKD 1,884 million in 2023, a decline of 26%[5] - The total revenue from customer contracts for the year ended December 31, 2024, was HKD 5,057,000, a decrease from HKD 5,891,068 in 2023, representing a decline of approximately 14.1%[15] - The company reported a net profit attributable to shareholders of HKD 1,494,066,000 for 2024, down from HKD 1,889,247,000 in 2023, indicating a decrease of about 20.9%[23] - The basic and diluted earnings per share for 2024 were HKD 0.301, compared to HKD 0.375 in 2023, reflecting a decline of approximately 19.7%[23] - The company’s top five customers accounted for approximately 62% of total operating revenue, with the largest customer contributing about 40%[39] Dividends and Payouts - The company proposed a final dividend of HKD 0.21 per share, up from HKD 0.18 in 2023, resulting in a total payout ratio of approximately 100% for the year[2] - The company declared a final dividend of HKD 0.18 per share for 2023, totaling HKD 886,831,000, down from HKD 0.28 per share in 2022, which amounted to HKD 1,414,515,000[22] - The total dividend proposed for the year ended December 31, 2024, is HKD 30 per share, an increase from HKD 28 per share in 2023[31] Assets and Liabilities - Total assets increased to HKD 22,948 million, up from HKD 22,492 million in 2023, reflecting a growth of 2%[6] - Current ratio improved to 4.25 from 3.97 in the previous year, indicating better short-term financial health[2] - Cash and cash equivalents rose to HKD 7,676 million, compared to HKD 6,552 million in 2023, showing an increase of 17%[6] - The net asset value attributable to owners per share decreased by 2% to HKD 3.24 from HKD 3.30 in the previous year[2] - The group's accounts payable decreased to HKD 282.26 million in 2024 from HKD 303.10 million in 2023[28] - The group's impairment loss on trade receivables decreased to HKD 182.86 million in 2024 from HKD 184.43 million in 2023[28] - The group’s total accounts receivable and notes receivable were recorded at HKD 757.52 million in 2024, compared to HKD 621.47 million in 2023[28] Production and Sales - The group's raw coking coal production decreased by 6% to approximately 4.96 million tons in 2024, down from 5.25 million tons in 2023[34] - The group's refined coking coal production fell by 3% to about 3.16 million tons in 2024, compared to 3.25 million tons in 2023[35] - The sales volume of refined coking coal increased by 1% to 3.13 million tons in 2024, up from 3.10 million tons in 2023[34] - The average selling price of refined coking coal decreased by 14% to RMB 1,666 per ton in 2024, down from RMB 1,932 per ton in 2023[34] - The cost of sales increased by approximately HKD 44 million or 2% year-on-year to HKD 2.469 billion, primarily due to a 1% increase in coking coal sales volume[42] Operational Changes and Strategy - The company reported no significant operational changes during the year, maintaining its focus on coking coal mining and production[8] - The company has not adopted any new accounting standards that would significantly impact its financial performance for the current or future periods[11] - The company plans to assess the impact of newly issued accounting standards on its financial performance and position, although it has not yet determined if these will have a significant effect[13] - The group did not engage in any significant investments or acquisitions during the fiscal year ending December 31, 2024[56] - The company completed the construction acceptance of its coal mine project in 2024 and obtained a safety production license[72] - The company aims to enhance production management and safety capabilities through digital management and automation[72] Governance and Management - The company has complied with the corporate governance code as per the listing rules during the fiscal year ending December 31, 2024[75] - The board of directors is composed of key executives including the chairman and several independent directors[80] - The presence of both executive and independent directors suggests a focus on governance and oversight in decision-making[80] - The board's composition reflects a diverse range of expertise, which may enhance strategic decision-making processes[80] Market and Economic Conditions - The company’s external customer revenue from China represents the majority of its total revenue, highlighting its reliance on this market[16] - The total revenue from external customers in Hong Kong remained at zero for 2024, compared to HKD 4,061 in 2023, indicating a complete withdrawal from this market[16] - The group experienced a foreign exchange loss of approximately HKD 168 million due to the depreciation of the RMB against the HKD[62] - The average trading volume increased by 11% for the year ending December 31, 2024, improving liquidity in stock trading[67] - The current ratio as of December 31, 2024, was 7% higher compared to December 31, 2023, and free cash resources increased by 15% year-on-year[67]

Core Viewpoints - The coal sector has experienced a high-level retreat in the first two months of 2025, underperforming the market by 11.8 percentage points, ranking last among all industry indices [4][14]. - The coal price is expected to stabilize and gradually recover due to improved industrial demand, slowing production growth, and reduced import expectations [4][29]. Group 1: Coal Sector Review - In the first two months of 2025, the coal sector has declined by 10.0%, ranking 30th out of 30 in the industry indices [4][14]. - The sub-sectors of thermal coal, coking coal, and coke have seen respective declines of 15.5%, 11.4%, and 7.4% in the first two months [14]. - As of March 18, 2025, the coal sector's price-to-earnings (PE) ratio is at 10.4 times, which is at a historical average level, while the price-to-book (PB) ratio is at 1.33 times, also at a historical average [19][23]. Group 2: Coal Market Review - The growth rate of electricity consumption has dropped to 1.3% in the first two months, while non-electric demand has shown overall improvement [4][29]. - Domestic coal prices have been weak since the beginning of the year, with thermal coal prices stabilizing in March [29]. - The import growth rate of coal has decreased to 1.8% in the first two months of 2025 [4][29]. Group 3: Recent Market Dynamics - Port thermal coal prices have slightly declined, while prices in production areas have generally rebounded [4][29]. - The price of thermal coal is expected to stabilize in the short term due to inventory reductions at southern ports and coastal power plants [4][29]. - Coking coal prices have continued to decline, but demand is expected to improve as the spring construction season approaches [4][29]. Group 4: Industry Outlook - The coal price is expected to find support at the bottom, with the sector's valuation and dividend advantages becoming more pronounced [4][29]. - The anticipated average coal price for 2025 may decline, but leading companies are expected to maintain stable profitability due to effective cost control [4][29]. - Key companies with robust dividends include Shaanxi Coal and China Shenhua, while companies with lower valuations and long-term growth potential include Xinji Energy and Yanzhou Coal [4][29].