STSS(000825) 国泰君安·2024-09-03 07:40Investment Rating - The report maintains a "Buy" rating for the company, with a target price of CNY 3.72, down from the previous target of CNY 4.90 [7] Core Views - The company turned profitable in H1 2024, with stainless steel profitability improving due to a larger decline in raw material prices compared to product prices [2] - Stainless steel demand remains on an upward trend, and there is no need for excessive pessimism [2] - The company's differentiated product sales accounted for 55.9% of total sales in H1 2024, with 95 differentiated products exceeding previous year's sales levels [7] - The company is expanding its high-value-added product exports, particularly in the "Belt and Road" markets [7] Financial Performance - H1 2024 revenue was CNY 49.714 billion, down 7.35% YoY, but net profit attributable to shareholders turned positive at CNY 139 million, up CNY 634 million YoY [7] - Q2 2024 net profit attributable to shareholders was CNY 136 million, up CNY 133 million QoQ [7] - The company's gross margin for stainless steel rose to 2.23% in H1 2024, up 2.11 percentage points from 2023 [7] - The company's overall gross margin improved to 2.04% in H1 2024, up 1.37 percentage points from 2023 [7] Industry and Market Data - China's stainless steel apparent consumption reached 18.7117 million tons in the first seven months of 2024, up 4.97% YoY [7] - The company's 52-week stock price range is CNY 3.23-4.17, with a market capitalization of CNY 18.433 billion [3] - The company's price-to-book ratio is 0.5x, and its net debt ratio is 3.45% [4] Financial Forecasts - Revenue is expected to be CNY 104.093 billion in 2024, down 1.4% YoY, with net profit attributable to shareholders forecasted at CNY 193 million, up 117.8% YoY [7] - EPS is projected to be CNY 0.03 in 2024, CNY 0.04 in 2025, and CNY 0.05 in 2026 [7] - ROE is expected to improve to 0.6% in 2024, 0.7% in 2025, and 0.8% in 2026 [7] Valuation - The company is valued at 0.63x PB for 2024, based on comparable companies such as Hunan Valin Steel, Xinjiang Ba Yi Iron & Steel, and Yongjin Metal [10][11]