Valin Steel(SZ:000932) Zhi Tong Cai Jing·2025-09-05 06:27Core Viewpoint - The steel industry is expected to see supply-demand improvement in the second half of 2025, driven by production regulation and a recovering inventory cycle, amidst a backdrop of anti-involution [1][3]. Group 1: Industry Cycle and Valuation - The steel sector has been gradually recovering from historical lows since Q3 2024, with current profitability at 50% of the complete cycle since 2015 and a low P/B valuation of 1.09X, indicating significant room for improvement [2]. - The industry is currently at the left side of a major cycle bottom reversal, with the bottom becoming increasingly clear, suggesting a potential upward resonance in the industry cycle [3]. Group 2: Supply-Side Reform - The path for the current supply-side reform in the steel industry is becoming clearer, focusing on differentiated production control based on efficiency and environmental standards, accelerating the elimination of outdated capacities, and promoting industry consolidation to improve competition [4]. - The central government's increasing emphasis on anti-involution is expected to accelerate supply-side reforms, leading to improved industry profitability and return on equity (ROE) [4]. Group 3: Investment Recommendations - The company recommends focusing on the upward resonance of multiple cycles in the steel industry in the second half of 2025, with core assets currently undervalued and expected to undergo valuation recovery as the profitability cycle bottoms out [5]. - Two main investment lines are suggested: long-term focus on high-quality core assets like Huazhong Steel (000932.SZ), and short-term focus on efficient rebar companies with a higher proportion of rebar production [5].