Core Viewpoint - CICC has lowered coal price and cost assumptions, resulting in a 4% reduction in Shougang Resources' (00639) 2025/26E profit to HKD 8.92 billion and HKD 9.78 billion respectively [1] Group 1: Financial Performance - The company's 1H25 net profit attributable to shareholders decreased by 38% year-on-year to HKD 4.04 billion, which was better than CICC's expectations due to a smaller decline in profit driven by coal prices, as the cost reduction exceeded expectations [2] - 1H25 production of raw coking coal and premium coking coal increased by 17% and 19% year-on-year to 2.64 million tons and 1.54 million tons respectively, with 100% of raw coal being washed [2] - The average selling price of premium coking coal in 1H25 fell by 45% year-on-year to HKD 1,067 per ton, while the price of Shanxi main coking coal decreased by 36% to HKD 1,401 per ton [2] Group 2: Cost and Cash Flow - The unit production cost of raw coking coal improved significantly in 1H25, decreasing by 28% year-on-year to HKD 328 per ton, with cash costs down by 32% to HKD 241 per ton [3] - The net operating cash inflow in 1H25 was HKD 4.53 billion, a decrease of HKD 7.27 billion year-on-year, with available free funds amounting to HKD 94.75 billion as of the end of June [3] - The company plans to distribute an interim dividend of HKD 0.06, corresponding to a payout ratio of 76%, resulting in an interim dividend yield of approximately 2.2% based on the current share price [3] Group 3: Market Outlook - CICC maintains a cautiously optimistic view on the coking coal market for 2H25, noting a rebound in coking coal prices since July due to supply contraction in some regions, with prices rising from HKD 968 per ton in June to HKD 1,278 per ton by August 28 [4] - The average price of coking coal in 3Q25 was HKD 1,209 per ton, reflecting a 10% increase compared to 2Q25 [4] - Future price increases may depend on further supply reductions, as demand for coking coal is expected to contract due to weak steel demand and declining profits [4]
中金：维持首钢资源跑赢行业评级 目标价3港元