Core Viewpoint - The credit rating agency maintains the long-term credit rating of CITIC Pacific Special Steel Group Co., Ltd. at AAA, with a stable outlook for both the company and its convertible bonds, reflecting strong financial health and competitive advantages in the special steel industry [1][4]. Company Overview - As of the end of 2024, the company has a registered capital of 50.47 billion yuan, with CITIC Pacific Investment Co., Ltd. holding 75.05% of the shares, indicating a stable ownership structure [4][15]. - The company specializes in the production and processing of black metal materials and has a production capacity of approximately 20 million tons of special steel materials annually [7][16]. Financial Performance - In 2024, the company reported total revenue of 1092.03 billion yuan, a decrease of 4.22% year-on-year, and a total profit of 59.24 billion yuan, down 9.68% from the previous year [4][15]. - The company's EBITDA for 2024 was 119.88 billion yuan, with a cash flow from operations of 107.41 billion yuan [4][15]. Debt and Credit Metrics - The company maintains a reasonable debt leverage ratio, with an asset-liability ratio of 60.53% and a cash-to-short-term debt ratio of 1.31 times as of the end of 2024 [7][19]. - The total debt of the company was 400.11 billion yuan, with long-term debt accounting for 230.47 billion yuan [4][15]. Industry Context - The steel industry is experiencing a downward trend in profitability due to overcapacity and declining steel prices, with the company facing increased competition and potential impacts from international trade policies [6][8]. - The company’s product structure is adjusting to focus on high-value-added products, which may help mitigate some of the pressures from the overall market [6][8]. Research and Development - The company increased its R&D expenditure to 46.02 billion yuan in 2024, reflecting a year-on-year growth of 3.39%, which supports its competitive edge in technology and product quality [7][16]. Market Position - The company has a strong market position with a diverse product range, producing over 3,000 varieties and 5,000 specifications of products, including high-end bearing steel and automotive steel [7][16]. - The company has received multiple certifications for its products, enhancing its competitiveness in both domestic and international markets [7][16].

Core Viewpoint - The company maintains stable steel sales in 2024, with a slight decline in revenue but an expected improvement in 2025, driven by growth in high-end steel products and exports [1][2][3]. Sales Performance - In 2024, the company sold 18.89 million tons of steel, remaining flat year-on-year, with exports accounting for 2.202 million tons [1]. - By product category, sales distribution includes 33.8% for the energy sector, 28.2% for the automotive sector, 19.0% for machinery, 10.3% for bearings, 2.1% for high-end special materials, and 6.6% for other industries [1]. - Notable growth in specific segments includes a 6% increase in bearing steel sales, a record high in energy steel sales, and a 29% increase in steel for new energy vehicles [1]. Revenue and Profitability - The company's revenue for 2024 was 109.203 billion yuan, a decrease of 4.22% year-on-year, with various product lines experiencing declines [1][2]. - The average steel price in 2024 was 5,781 yuan per ton, also down by 4.22%, leading to a gross profit margin of 743 yuan per ton, a decrease of 6.35% [1]. - The net profit attributable to shareholders for 2024 was 5.126 billion yuan, down 10.41%, while Q1 2025 showed a net profit of 1.384 billion yuan, an increase of 1.76% year-on-year and 7.31% quarter-on-quarter [2]. Cost and Expenses - The decline in gross margin is attributed to increased depreciation and amortization, leading to higher operating costs [2]. - The company’s expense ratio for 2024 was 7.36%, up 0.45 percentage points, with increases in sales, management, and R&D expenses [2]. - Total impairment losses for 2024 amounted to 766 million yuan, an increase due to rising bad debt losses and inventory write-downs [2]. Cash Flow and Financial Health - The company reported an improved cash flow situation, with a cash collection ratio of 0.8459, up 4.43 percentage points, and a cash payment ratio of 0.7494, up 4.67 percentage points [2]. - The net operating cash flow was 10.741 billion yuan, showing a year-on-year increase, while investment cash flow showed a reduced outflow of 302 million yuan [2]. - The asset-liability ratio stood at 60.53%, a decrease of 3.73 percentage points, indicating improved financial stability [2]. Investment Outlook - The company is actively expanding its high-end steel product offerings and optimizing its product mix, with projected net profits of 5.476 billion yuan, 6.057 billion yuan, and 6.722 billion yuan for 2025-2027 [3].