SHANDONG STEEL(SH:600022) Orient Securities·2025-02-23 05:29Investment Rating - The report assigns a "Buy" rating for Shandong Steel, with a target price of 1.69 CNY per share based on a projected PB of 0.94X for 2025 [3][6]. Core Views - Shandong Steel, a traditional steel enterprise, is undergoing a transformation supported by synergies from Baowu Steel Group, which has acquired a significant stake in the company. This partnership is expected to enhance operational efficiency and cost reduction [7][18]. - The steel industry is currently facing a downturn due to weak demand, particularly from the real estate sector, but there are signs of a potential recovery as costs decline and new demand from shipbuilding and infrastructure projects emerges [7][39]. - The company's advanced products, such as section steel and ship plates, are well-positioned to meet future demand, providing opportunities for profitability despite current challenges [7][39]. Summary by Sections Company Overview - Shandong Steel was established in 2011 through the merger of Jinan Steel and Laiwu Steel, focusing on plate and coil products as its main profit sources [12][21]. - The company is controlled by the Shandong State-owned Assets Supervision and Administration Commission, with Baowu Steel holding a strategic stake [16][17]. Financial Performance - The company's revenue has declined significantly, with 2022 revenue at 102.3 billion CNY, down 7.7% year-on-year, and 2023 revenue projected to decrease by 11.5% [3][21]. - The net profit attributable to shareholders has also suffered, with a forecasted loss of 2.1 billion CNY in 2024, reflecting a 425.6% year-on-year decline [3][36]. Industry Status - The steel industry is currently experiencing a downturn, with a decline in crude steel apparent consumption for three consecutive years, and a projected further decrease in demand from the real estate sector [39][50]. - Despite the challenges, there are expectations for a gradual recovery in demand, particularly in the shipbuilding and infrastructure sectors, supported by government policies aimed at stimulating the economy [52][56].