XINXING PIPES(SZ:000778) Soochow Securities·2025-09-09 13:44Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [1]. Core Views - The company is positioned to benefit from a cyclical turnaround in the steel industry, driven by non-U.S. demand and policies aimed at reducing competition, presenting a significant opportunity by 2025 [1][7]. - The company is the world's leading ductile iron pipe manufacturer, with a domestic market share of 58% expected to increase further [1][27]. - The report anticipates a recovery in the company's financial metrics starting in 2025, with significant profit growth projected for the following years [1][43]. Summary by Sections Steel Industry Outlook - The steel industry is transitioning from active to passive destocking, influenced by policies that drive supply reduction and structural demand recovery [7][12]. - Rebar inventory is at a historical low, with a notable decrease in steel consumption expected [13][14]. - The current cycle is characterized by a shift in demand dynamics, with non-U.S. markets becoming increasingly important [20][21]. Company Performance and Strategy - The company has a robust market position, with a projected increase in its ductile iron pipe market share and significant contract signings [27][39]. - The establishment of a factory in Egypt is part of the company's strategy to localize production and mitigate trade barriers, enhancing its global supply chain [39][40]. - Financial forecasts indicate a recovery in revenue and profit margins, with a significant increase in net profit expected by 2027 [43][44]. Financial Projections - Revenue is projected to decline in 2025 before recovering in subsequent years, with a compound annual growth rate expected in the following years [43][44]. - The company's earnings per share (EPS) is forecasted to rise significantly, reflecting the anticipated recovery in profitability [1][43]. - The report highlights a favorable valuation compared to peers, suggesting the stock is undervalued at current levels [43].