YouFa(601686) Huafu Securities·2025-03-25 09:19Investment Rating - The report initiates coverage with a "Buy" rating for the company [5]. Core Views - The company has been a leader in the welded pipe industry for over 20 years, maintaining the highest production and sales volume in China for 18 consecutive years [3][16]. - The steel industry is undergoing supply-side structural reforms, which are expected to improve the supply-demand relationship and lead to a recovery in profits for steel companies [4][50]. - The company has implemented two stock incentive plans since its listing in 2020, effectively binding key talents to the company's long-term goals, and has a high dividend payout ratio, providing a safety margin for investors [4][5]. Company Overview - The company was founded in 2000 and has grown to become the largest welded pipe manufacturer in China, with a diversified product matrix including hot-dip galvanized pipes, spiral pipes, and rectangular pipes [3][16]. - The company achieved total sales revenue exceeding 100 billion yuan for the first time in 2006, with production capacity reaching over 20 million tons by 2022 [3][16]. - The company has a strong market position with a market share of over 20% in the welded pipe sector [4]. Financial Performance - In 2023, the company reported revenues of 60.9 billion yuan, a decrease of 9.56% year-on-year, while net profit increased by 91.86% to 570 million yuan [22]. - For the first three quarters of 2024, the company achieved revenues of 40.07 billion yuan, down 13.37% year-on-year, with a net profit of 100 million yuan, down 77.07% [3][22]. - The company has a clear dividend policy, with a minimum cash dividend ratio of no less than 20% planned for 2024-2026 [4]. Industry Outlook - The steel industry is expected to see a decline in crude steel production in 2024, reflecting the government's commitment to controlling production and eliminating excess capacity [4][50]. - The demand for steel is anticipated to stabilize as the economy recovers, with infrastructure projects and manufacturing sectors contributing to growth [4][70]. - The global steel demand is projected to rebound by 1.2% in 2025, which is favorable for China's steel exports [4].