Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 17.88, up from the previous value of RMB 17.42 [4][6]. Core Views - The company demonstrated strong resilience in its development, with a slight year-over-year revenue decline of 4.02% to RMB 54.715 billion in H1 2025, while net profit increased by 2.67% to RMB 2.798 billion [1][2]. - The company is focusing on strategic sectors such as wind power, oil and gas, hydrogen energy, pumped storage, and new energy vehicles, which are expected to drive demand for its products [2]. - The steel industry is entering a phase where the urgency and strategic nature of anti-involution policies are being debated, with potential production cuts that could enhance profitability if implemented [3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved revenue of RMB 27.875 billion, a year-over-year decrease of 2.45% but a quarter-over-quarter increase of 3.86%. Net profit for the same period was RMB 1.414 billion, reflecting a year-over-year increase of 3.58% [1][2]. - The gross margin for Q2 2025 was reported at 14.89%, an increase of 1.07 percentage points from the previous quarter [2]. Market Position and Strategy - The company is a leader in the special steel sector, with a strong focus on optimizing its product structure and enhancing quality and efficiency [2]. - The sales distribution of products across various sectors includes 35% in energy, 25% in automotive, 20% in machinery, and 10% in bearings [2]. Earnings Forecast - The earnings per share (EPS) forecast for 2025, 2026, and 2027 is projected to be RMB 1.14, RMB 1.28, and RMB 1.49 respectively [4][10]. - The report anticipates a recovery in profitability driven by potential production cuts in the steel industry, contingent on government policy implementation [3].