Investment Rating - The report maintains an "Accumulate" rating for the company [7] Core Views - The steel industry is experiencing improved profitability, leading to a sequential improvement in the company's performance for Q1 2025. The company reported revenue of 8.375 billion RMB, a year-on-year decrease of 8.21% and a quarter-on-quarter decrease of 8.11%. However, the net profit attributable to the parent company was 137 million RMB, showing a year-on-year decrease of 19.84% but a quarter-on-quarter increase of 143.36% [1][2] - The company is actively pursuing cost-saving measures and enhancing the differentiation and high-end nature of its casting pipe products. It is also increasing its market share in new products and markets, while steadily raising the proportion of special steel products [2] - The report indicates that the steel industry's supply-side optimization is gradually approaching, which is expected to further improve profitability in the sector [3] Summary by Sections Financial Performance - In Q1 2025, the company's total operating costs decreased by 10.74% year-on-year, which is greater than the revenue decline of 8.21%. This resulted in an increase in the sales gross margin by 2.77 percentage points to 7.61%. The net profit margin also increased by 6.81 percentage points to 1.83% due to improvements in various period expenses [2] - The report forecasts the company's earnings per share (EPS) for 2025-2027 to be 0.18, 0.24, and 0.26 RMB respectively, with book value per share (BVPS) projected at 6.57, 6.74, and 6.90 RMB [4] Market Conditions - The average sales profit margin for key enterprises in the steel industry was 0.71% in 2024, a year-on-year decrease of 0.63 percentage points. The government has been emphasizing strict control over steel production to prevent excessive competition, indicating a potential restart of supply-side optimization [3] - The report predicts that the global iron ore production capacity will continue to expand in 2025, which may lead to a further decline in iron ore prices and an overall recovery in steel industry profits [3] Valuation - The target price for the company is set at 3.98 RMB, based on a price-to-earnings (PE) ratio of 0.61X for 2025, which is higher than the average PE of comparable companies at 0.52X [4][8]

Core Viewpoint - Baosteel Co., Ltd. reported a decline in revenue and net profit for 2024, primarily due to weak steel industry conditions, but showed signs of recovery in Q1 2025, leading to a "buy" rating for the stock [1][4]. Group 1: Financial Performance - In 2024, Baosteel achieved revenue of 322.116 billion yuan, a year-over-year decrease of 6.60%, and a net profit of 7.362 billion yuan, down 38.36% year-over-year, which was below previous expectations [1]. - For Q1 2025, the company reported revenue of 72.880 billion yuan, a year-over-year decline of 9.82% and a quarter-over-quarter decline of 8.05%, with a net profit of 2.434 billion yuan, reflecting a year-over-year increase of 26.37% and a quarter-over-quarter increase of 64.49% [1][2]. Group 2: Industry Conditions - The steel industry faced a decline in both production and sales in 2024, with output and sales volumes of 51.41 million tons and 51.59 million tons, respectively, representing decreases of 1.0% and 0.6% year-over-year [2]. - The average selling price of steel products was 4,056 yuan per ton (excluding tax), down 6.9% year-over-year, indicating a significant drop in industry profitability [2]. - The average sales profit margin for key enterprises in the steel industry was 0.71% in 2024, down 0.63 percentage points year-over-year, highlighting the industry's challenging conditions [3]. Group 3: Future Outlook - The steel industry is expected to undergo supply-side optimization, with government efforts to control production and prevent excessive competition, which may lead to a recovery in industry profits [3]. - Predictions for 2025 suggest that global iron ore production capacity will continue to expand, potentially leading to a decrease in iron ore prices and further recovery in steel industry profits [3]. - The company has adjusted its earnings per share (EPS) forecasts for 2025-2027 to 0.43, 0.56, and 0.65 yuan, respectively, reflecting a downward adjustment for 2025-2026 due to lower steel price expectations [4].

Investment 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].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of 7.98 RMB [5][8]. Core Views - The company reported a revenue of 322.12 billion RMB in 2024, a year-on-year decrease of 6.60%, and a net profit attributable to shareholders of 7.36 billion RMB, down 38.36% year-on-year, primarily due to weak industry conditions [1][2]. - In Q1 2025, the company achieved a revenue of 72.88 billion RMB, a year-on-year decrease of 9.82% and a quarter-on-quarter decrease of 8.05%, with a net profit of 2.43 billion RMB, reflecting a year-on-year increase of 26.37% and a quarter-on-quarter increase of 64.49% [1][3]. - The steel industry is expected to undergo supply-side optimization, which may lead to a recovery in industry profits, benefiting the company as a leading player in the sector [4]. Summary by Sections Financial Performance - The company's steel product output and sales for 2024 were 51.41 million tons and 51.59 million tons, respectively, with a year-on-year decrease of 1.0% and 0.6% [2]. - The average selling price of steel products was 4,056 RMB per ton (excluding tax), 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, with year-on-year changes of -0.75, +0.3, and -1.33 percentage points [2]. Industry Outlook - The steel industry faced significant oversupply in 2024, with the average sales profit margin for key enterprises at 0.71%, down 0.63 percentage points year-on-year [4]. - Government measures to control steel production and prevent excessive competition indicate a potential restart of supply-side optimization [4]. - The global iron ore production capacity is expected to continue expanding in 2025, which may lead to a further decline in iron ore prices and a recovery in steel industry profits [4]. Earnings Forecast - The company’s earnings per share (EPS) for 2025-2027 are projected to be 0.43, 0.56, and 0.65 RMB, with adjustments reflecting a 13% decrease and a 5% increase for 2025-2026 compared to previous estimates [5]. - The book value per share (BVPS) for 2025-2026 is estimated at 9.40 and 9.53 RMB, respectively [5]. - The target price of 7.98 RMB is based on an average price-to-book (PB) ratio of 0.84X since 2017 [5].