Core Viewpoint - Company reported significant improvement in performance for the first half of 2025, particularly in Q2, exceeding market expectations due to lower raw material prices, operational efficiency, and stable competition in high-end steel products [2][11]. Financial Performance - Company achieved a total revenue of 630.92 billion yuan in H1 2025, a decrease of 16.93% year-on-year, while net profit attributable to shareholders rose by 31.31% to 17.48 billion yuan [11]. - In Q2 2025, revenue was 328.63 billion yuan, down 15.52% year-on-year, but net profit increased by 26.22% to 11.86 billion yuan [11]. Operational Insights - The improvement in profitability was attributed to three main factors: significant decline in raw material prices compared to steel prices, elimination of short-term disruptions from the previous year, and effective cost management across production bases [2]. - The company maintains a direct supply model for specialty steel, with pricing determined 1-2 months in advance based on raw material costs and customer requirements [3]. Market Outlook - The third quarter is traditionally a slow season, with a decline in demand for thin plate products, while demand for VM automotive plates showed improvement [4]. - The company anticipates that industry profitability may narrow in Q3 due to rising raw material costs, particularly for coking coal, which has increased more than steel prices [4]. Export Strategy - The company plans to enhance its overseas presence, particularly in the Middle East and Europe, despite challenges posed by anti-dumping measures affecting "buy order" exports [5]. Regulatory Compliance - The company has applied for "leading normative enterprise" status under the 2025 Steel Industry Normative Conditions, which aims to promote high-quality development in the industry [5][6]. Production Guidance - In H1 2025, the company sold 11.1 million tons of steel, a decrease of 12.6% year-on-year, and expects to adjust production based on downstream demand and profitability [6]. Project Developments - The company has made progress in its silicon steel projects, with the first production line for non-oriented silicon steel expected to meet demand from key customers starting January 2025 [8]. Tax and Financial Strategy - Other income decreased due to changes in tax policies affecting advanced manufacturing VAT rebates, while the company continues to benefit from a 15% corporate income tax rate for high-tech enterprises [9]. - The company plans capital expenditures of 5.467 billion yuan in 2025, focusing on product structure upgrades and low-emission projects, with a cash dividend ratio expected to increase in the future [10].

Group 1: Financial Performance - The company's performance in the first half of the year, especially in Q2, showed significant improvement year-on-year and quarter-on-quarter, exceeding market expectations due to three main factors: a notable decline in raw material prices, elimination of previous short-term disruptions, and stable competition in the high-end steel market [2][4]. - In H1 2025, the company achieved a steel sales volume of 11.1 million tons, a decrease of 12.6% year-on-year, with an adjusted decline of about 10% when excluding direct sales of steel billets [8]. Group 2: Pricing and Inventory Management - The pricing for specialty steel products is negotiated individually, typically 1-2 months in advance, based on current raw material costs and customer requirements, ensuring a relatively stable profit margin compared to ordinary steel [3]. - The company maintains a lean inventory strategy, with iron ore inventory cycles of approximately 22-25 days and coal/coke inventory cycles of 10-15 days, using a first-in-first-out method for accounting [3]. Group 3: Market Outlook and Demand - The third quarter is traditionally a slow season, particularly for thin plate products, with a slight decline in demand from sectors like home appliances and engineering machinery, although there was some improvement in automotive steel orders [4]. - The company anticipates that industry profitability may narrow in Q3 due to rising raw material prices, particularly coking coal, which has increased significantly more than steel prices [4]. Group 4: Export Strategy - The company views "buy order exports" as detrimental, leading to lower overseas prices and triggering anti-dumping measures, and plans to enhance its overseas presence, particularly in the Middle East and Europe [5]. Group 5: Compliance and Industry Standards - The company has applied for "leading standard enterprise" status under the 2025 Steel Industry Norms, which aims to promote high-quality development and optimize supply in the steel industry [6][7]. Group 6: Capital Expenditure and Dividends - The company plans to invest in projects focused on product structure upgrades and ultra-low emissions, with a capital expenditure of approximately 1 billion yuan in 2025, where 40%-50% will be allocated to ultra-low emissions projects [11]. - The cash dividend ratio has steadily increased, reaching 34% of net profit for 2024, with projections for a combined ratio of 44%-54% for 2024 and 2025 due to ongoing share buyback plans [11].

Group 1: General Information - The research was conducted on Valin Steel in the steel industry on July 16, 2025, with participation from institutions like Changjiang Securities and Southern Fund [1][2][9] - The listed company's reception staff included Yang Xianghong, Liu Xiaofei, and Wang Yin [9] - The detailed research institutions and their relevant personnel are listed, with Changjiang Securities sending Zhao Chao and Southern Fund sending multiple people such as Lei Jiayuan [10] Group 2: Industry Outlook - The steel industry is in the bottom - range of a 7 - 10 - year cycle since mid - 2022, but there are signs of stabilization. From January to May this year, the loss - making ratio of large and medium - sized steel enterprises was 26.14%, with the loss - making ratio narrowing year - on - year and a slight profit recovery [15] - Domestic steel demand will decline slowly in the long term without a cliff - like drop. There are still structural opportunities, with weak real - estate demand but relatively stable manufacturing demand and growth opportunities in sectors like shipbuilding, wind power, silicon steel, and new - energy vehicles [15] - The supply of raw materials such as iron ore and coking coal has increased, leading to a lower price center. For example, the purchase cost of coking coal for key steel enterprises decreased by 32% in the first half of this year [15] - The steel industry order is expected to improve. The industry has entered a stage of stock optimization and减量 development, and the government has emphasized the regulation of crude steel production. The "anti - involution" initiative is a long - term mechanism for the industry [15][16] - Ultra - low emission transformation is a short - term policy tool for industry clearance, and about 80% of the production capacity is expected to complete the transformation by the end of the year. The "Steel Industry Specification Conditions (2025 Edition)" will promote industry optimization [16] Group 3: Homogeneous Competition - Homogeneous competition in the steel industry has led to the industry's global competitiveness. However, the transformation from a general steel enterprise to a high - quality special steel producer faces systematic thresholds in technology, talent, management, and systems [17] - High - end competition is a long and difficult road, and the transformation cycle usually takes about 20 years. Companies should focus on building core products and technologies to maintain competitiveness [17][18] Group 4: VAMA Company - VAMA focuses on the high - end automotive steel market in China, with a rich product matrix including advanced high - strength steel and ultra - high - strength steel. It has established a competitive advantage in the automotive safety structural parts segment [18][19] - It has responded to industry requirements with multi - part integration solutions and has seen an increase in sales to new - energy vehicle manufacturers. Its Phase I and II projects are almost at full production, and sales are increasing year - on - year [19][20] - The "anti - involution" in the automotive industry is beneficial to VAMA's cash flow and capital turnover. Most of its transactions are on a prepaid basis [20] - In 2025, Ansteel Mittal plans to introduce 24 advanced steel grades to VAMA, with 6 making substantial progress. VAMA's Phase III project is in the feasibility study stage, planning to introduce JVD technology and a green development path [21] - Ansteel Mittal is considering setting up a global automotive steel R & D center in China to support VAMA's development [21][22] - VAMA's automotive plate patent products are priced semi - annually and negotiated one - on - one with customers, with a price adjustment mechanism in case of market changes. The hot - rolled substrate is priced monthly [25] - VAMA's Usibor 1500 is protected by many patents, and it is also protected by other patents from Ansteel Mittal in China [26][27] Group 5: Company Performance and Strategy - Valin Steel's profit in 2024 was affected by short - term factors such as the transition of the raw material policy, equipment maintenance, and short - term tax issues, which have now been resolved [25] - The company has not issued a semi - annual performance forecast because it did not meet the requirements. Since the second quarter, its downstream demand has been stable, and orders are sufficient [25] - The company's R & D investment includes various aspects such as daily R & D expenses, technology acquisition, and small - batch trial production costs. High R & D investment is necessary for the company's transformation and competitiveness [28][29] - Xintai Life Insurance's stake - holding in the company is due to its optimistic view of the company's long - term prospects and investment value. The company welcomes long - term capital [29] - In 2025, the company's new capital expenditure is expected to be 5.467 billion yuan, with 40% - 50% for ultra - low emission transformation. After 2026, the environmental protection capital expenditure is expected to decrease, and the dividend ratio may increase [30]