Zheng Quan Zhi Xing·2025-08-27 13:26Core Viewpoint - China Galaxy Securities has issued a buy rating for China Steel International, highlighting the company's profitability improvement and growth driven by the Belt and Road Initiative [1] Financial Performance - In the first half of 2025, China Steel International reported revenue of 6.745 billion yuan, a year-on-year decrease of 25.66% [2] - Breakdown of revenue shows: - Engineering contracting revenue at 6.316 billion yuan, down 25.09% - Product sales revenue at 306 million yuan, down 38.13% - Service revenue at 108 million yuan, down 17.64% - Domestic business revenue was 1.76 billion yuan, down 59.88%, while overseas business revenue was 4.985 billion yuan, up 6.36% [2] - The company achieved a net profit attributable to shareholders of 424 million yuan, a year-on-year increase of 1.11% [2] - The net cash flow from operating activities was -2.912 billion yuan, a decrease of 1.356 billion yuan year-on-year, primarily due to reduced revenue and delayed payments from clients [2] Profitability and Contracts - The company's gross margin improved to 15.12%, an increase of 3.66 percentage points year-on-year [3] - Domestic engineering gross margin was 18.9%, up 8.58 percentage points, while overseas gross margin was 13.78%, up 1.25 percentage points [3] - The net profit margin was 6.54%, an increase of 1.7 percentage points [3] - New contracts signed totaled 6.308 billion USD, a year-on-year decrease of 34.96% [3] - As of June 2025, the total value of signed but uncompleted contracts was 38.926 billion yuan, with ongoing project amounts at 21.866 billion yuan [3] Strategic Initiatives - The company actively promotes the "Belt and Road" initiative and has achieved a ranking of 77 among the "Top 250 International Contractors" globally in 2024, marking its best historical performance [3] - Strong partnerships with major global companies such as Rio Tinto, ArcelorMittal, Vale, and others have been established, showcasing the company's robust international market expansion capabilities [3] Investment Recommendations - Projected net profits for 2025, 2026, and 2027 are 875 million yuan, 920 million yuan, and 983 million yuan respectively, with year-on-year growth rates of 4.75%, 5.18%, and 6.79% [4] - Corresponding price-to-earnings ratios are estimated at 10.74, 10.21, and 9.56 [4]