Baosteel(SH:600019) HTSC·2025-04-29 04:10Investment Rating - The report maintains a "Buy" rating for the company [5][8]. Core Views - The steel industry is experiencing a downturn, leading to pressure on the company's performance, with a revenue of 322.12 billion RMB in 2024, down 6.60% year-on-year, and a net profit of 7.36 billion RMB, down 38.36% year-on-year [1][2]. - In Q1 2025, the company reported a revenue of 72.88 billion RMB, a decrease of 9.82% year-on-year, but a net profit increase of 26.37% year-on-year to 2.43 billion RMB, indicating some recovery [1][3]. - The report suggests that the supply-side optimization in the steel industry may be approaching, which could benefit the company as an industry leader [4]. Summary by Sections Financial Performance - In 2024, the company's steel product output and sales were 51.41 million tons and 51.59 million tons, respectively, with average sales prices at 4,056 RMB per ton, down 6.9% year-on-year [2]. - The gross profit margin, expense ratio, and net profit margin for 2024 were 5.45%, 3.34%, and 2.66%, respectively, reflecting a decline in profitability [2]. - The company’s net profit for 2025 is projected to recover to 9.36 billion RMB, with EPS estimates of 0.43, 0.56, and 0.65 RMB for 2025-2027 [5][7]. Market Conditions - The report highlights that raw material prices have decreased more than steel prices, leading to improved profit margins for the company in Q1 2025 [3]. - The average sales profit margin for key enterprises in the steel industry was 0.71% in 2024, down 0.63 percentage points year-on-year, indicating a challenging market environment [4]. Valuation - The target price for the company is set at 7.98 RMB, based on an average PB of 0.84X since 2017 [5][9]. - The report projects a decline in steel prices for 2025-2026, leading to adjustments in the company's expense forecasts [5].