SINOSTEEL ENTEC(SZ:000928) HTSC·2025-08-26 07:05Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 9.80 [1][5]. Core Insights - The company reported a revenue of RMB 6.745 billion for H1 2025, a year-over-year decrease of 25.66%, while the net profit attributable to shareholders was RMB 424 million, reflecting a slight increase of 1.11% year-over-year [1]. - The overseas business revenue significantly increased, accounting for 74% of total revenue, with a gross margin improvement to 15.12% in H1 2025, up 3.66 percentage points year-over-year [2]. - The company is expected to maintain steady growth due to favorable overseas market conditions and potential recovery in the domestic steel industry [1]. Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of RMB 6.745 billion, with a net profit of RMB 424 million, and a non-recurring net profit of RMB 422 million, showing a year-over-year increase of 13.01% [1]. - The second quarter revenue was RMB 3.226 billion, down 22.67% year-over-year and 8.31% quarter-over-quarter, with a net profit of RMB 193 million, down 5.88% year-over-year [1]. Profitability Metrics - The overall gross margin for H1 2025 was 15.12%, with the second quarter gross margin reaching 16.62%, reflecting significant improvements in both domestic and international margins [2]. - The net profit margin for H1 2025 was 6.29%, an increase of 1.67 percentage points year-over-year, while the non-recurring net profit margin was 6.26%, up 2.14 percentage points year-over-year [3]. Cash Flow and Financial Health - The operating cash flow for H1 2025 was negative RMB 2.912 billion, a decline of RMB 1.355 billion year-over-year, primarily due to delayed payments from clients [4]. - The company's debt ratio stood at 66.65%, a decrease of 2.30 percentage points year-over-year, with an interest-bearing debt ratio of 6.08%, an increase of 1.76 percentage points year-over-year [4]. Earnings Forecast and Valuation - The forecasted net profits for the company are RMB 878 million, RMB 925 million, and RMB 969 million for 2025, 2026, and 2027 respectively [5]. - The company is assigned a price-to-earnings (P/E) ratio of 16 times for 2025, leading to an adjusted target price of RMB 9.80, reflecting a valuation adjustment based on comparable companies [5].