Investment Rating - The report maintains a "Buy" rating for Shougang Resources, with a target price of HKD 3.19, indicating an expected performance that exceeds the local market index by over 15% [7][8]. Core Views - The significant increase in the sales proportion of high-sulfur coking coal has impacted sales prices, but the pressure is expected to ease in the first half of 2025. The company is projected to maintain a 100% dividend payout ratio for 2024, supported by strong cash flow [2][8]. - The company experienced a decline in total revenue for 2024, amounting to HKD 5.057 billion, a decrease of 14% year-on-year, while net profit fell by 21% to HKD 1.494 billion. This decline is attributed to changes in sales structure, falling coking coal prices, and currency exchange rate impacts [8]. Financial Summary - Revenue and Profit Trends: - Revenue for 2021 was HKD 7,075.82 million, increasing to HKD 8,214.72 million in 2022, before dropping to HKD 5,891.07 million in 2023 and further to HKD 5,057 million in 2024, reflecting a 14.2% decrease [6]. - Net profit followed a similar trend, with HKD 2,538.50 million in 2021, HKD 2,715.37 million in 2022, HKD 1,889.25 million in 2023, and HKD 1,494.07 million in 2024, marking a 20.9% decline [6]. - Production and Sales: - The company anticipates a raw coking coal production of approximately 4.96 million tons in 2024, a decrease of 6%, while the production of premium coking coal is expected to be around 3.16 million tons, down 3% [8]. - The average selling price of premium coking coal is projected to be HKD 1,666 per ton in 2024, a decline of 14% year-on-year [8]. - Dividend and Cash Flow: - The company expects to distribute profits amounting to HKD 1.512 billion in cash for 2024, with a dividend payout ratio of 100%, an increase from 73% in 2023 [8].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 3.40 [6][7]. Core Views - The company reported a revenue of HKD 5.06 billion for 2024, a decrease of 14.2% year-on-year, primarily due to a decline in average selling prices and increased production costs [1][2]. - Despite the revenue decline, the company declared a total dividend of HKD 0.30 per share, an increase of 7.1% year-on-year, with a dividend payout ratio reaching 100% [1][3]. - The company has a strong asset base and stable operations, which supports its high dividend yield of 11.5% [1][3]. Summary by Sections Revenue and Profitability - The company achieved a net profit of HKD 1.49 billion in 2024, down 20.9% year-on-year, with a gross profit margin of 51.2% [5][12]. - The average selling price of premium coking coal fell by 13.8% to HKD 1,666 per ton, which was more significant than the market average decline [2][3]. Production and Costs - The company produced 4.96 million tons of raw coking coal in 2024, a decrease of 5.5% year-on-year, while premium coking coal production was 3.16 million tons, down 2.8% year-on-year [2][3]. - Production costs for raw coal increased by 7% to HKD 429 per ton, influenced by various cost factors including resource taxes and labor [3][20]. Financial Forecasts - The forecast for net profit for 2025 is adjusted to HKD 1.05 billion, reflecting a 39% decrease from previous estimates [4][11]. - The company is expected to maintain a dividend payout ratio of 80% from 2025 to 2035, with a perpetual growth rate assumption of 0% [4][13]. Valuation Metrics - The company’s price-to-earnings (P/E) ratio is projected to be 12.37 for 2025, while the price-to-book (P/B) ratio is expected to be 0.75 [5][20]. - The target price of HKD 3.40 represents a 6.3% increase from the previous target price of HKD 3.20 [11][20].