xinsteel(SH:600782) Huachuang Securities·2025-04-24 05:15Investment Rating - The report upgrades the investment rating of the company to "Strong Buy" due to its low valuation and potential for performance growth driven by industry recovery [2][9]. Core Views - The company reported a total revenue of 41.804 billion yuan in 2024, a year-on-year decrease of 41.24%, and a net profit attributable to shareholders of 0.33 million yuan, down 93.41% year-on-year. However, in Q4 2024, the net profit attributable to shareholders reached 6.12 million yuan, a significant increase of 2774.96% year-on-year [2][5]. - The steel industry is currently facing challenges, with a structural adjustment in demand leading to a decrease in steel prices. The average steel price index fell by 8.40% compared to 2023, while the cost reduction was only 4.41%, compressing profit margins [9]. - The company is optimizing operations and reducing costs, with a focus on differentiating its products. The proportion of high-end and key products increased from 48.43% in 2023 to 55.27% in 2024. Additionally, the company expanded its overseas market, achieving a 13% year-on-year increase in export volume [9]. - The company is expected to benefit from the recovery of the steel industry, with projected revenues of 44.564 billion yuan, 46.771 billion yuan, and 47.722 billion yuan for 2025, 2026, and 2027, respectively, representing year-on-year growth rates of 6.6%, 5.0%, and 2.0% [9][10]. Financial Summary - In 2024, the company achieved a gross margin of 0.95%, a decrease of 0.95 percentage points year-on-year. The projected net profit for 2025 is expected to be 565 million yuan, reflecting a year-on-year growth of 1623.3% [5][9]. - The company's price-to-earnings (P/E) ratio is projected to decrease from 385 in 2024 to 22 in 2025, indicating a significant improvement in valuation as earnings recover [5][10]. - The company’s total assets are projected to remain stable around 52 billion yuan from 2024 to 2027, with a debt-to-equity ratio of approximately 21% in 2025 [10].