Baosteel(SH:600019) HTSC·2025-08-29 04:52Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 8.00 [1][2][9] Core Views - The company reported a year-on-year increase in net profit attributable to shareholders for the first half of 2025, amounting to RMB 4.879 billion, which is a 7.36% increase [6] - The company is expected to gradually recover its profits as an industry leader, despite a decrease in revenue and production [6][7] - The steel industry is entering a phase where the urgency for de-involution is both short-term and strategic, with potential improvements in profitability depending on government policies [8] Financial Performance - For the first half of 2025, the company achieved revenue of RMB 151.372 billion, a decrease of 7.28% year-on-year, while the net profit was RMB 4.879 billion, an increase of 7.36% year-on-year [6] - The company’s steel production and sales slightly decreased to 25.46 million tons and 25.31 million tons respectively, with a focus on optimizing product structure [7] - The gross profit margin increased by 1.15 percentage points, with gross profit rising by 11.36% to RMB 10.414 billion [7] Earnings Forecast and Valuation - The forecasted net profits for the company from 2025 to 2027 are RMB 9.362 billion, RMB 12.257 billion, and RMB 14.291 billion respectively, with corresponding EPS of RMB 0.43, RMB 0.56, and RMB 0.66 [9] - The company’s price-to-earnings (PE) ratio is projected to decrease from 20.77 in 2024 to 10.70 in 2027, indicating a potential undervaluation [5][9] - The target price of RMB 8.00 is based on an average price-to-book (PB) ratio of 0.84, reflecting a favorable valuation compared to historical averages [9]