Yongjin Technology (SH:603995)2026-01-15 01:06Summary of the Conference Call for Yongjin Co., Ltd. Industry and Company Overview - Company: Yongjin Co., Ltd. - Industry: Steel manufacturing, specifically focusing on stainless steel production and processing in Vietnam Key Points and Arguments Investment Plans - Yongjin plans to invest in a phased manner to establish a steelmaking and hot-rolling industry chain in Vietnam, starting with a 500,000-ton hot-rolling production line to mitigate trade barriers and future supply chain risks [2][4] - The project will utilize overseas cash flow for funding, avoiding domestic ODI processes due to the project's cost exceeding $300 million, which requires approval from the National Development and Reform Commission [5] Environmental Considerations - The project will adopt a short-process steelmaking method, which is expected to lower carbon emissions and help address potential future carbon tariffs [6] - Research is needed on the availability of scrap steel in Vietnam and surrounding countries to ensure sufficient raw material supply [6] Financial Projections - The expected annual return on investment for the project is approximately 14%, with a per-ton investment cost of about 1,300 RMB and a projected net profit of around 200 RMB per ton once fully operational [9] - In 2024, the net profit for cold-rolled processing in Vietnam is expected to exceed 800 RMB per ton, but in 2025, profits may be significantly compressed due to anti-dumping measures from South Korea, potentially reducing gross profit to only a few hundred RMB per ton [10] Market Dynamics - China is the largest market for scrap stainless steel, but the recycling system in Europe and the U.S. is more mature. Future export controls from China and Indonesia may limit raw material sources for Vietnam [12] - Yongjin aims to gradually enhance self-sufficiency through the short-process steelmaking project, initially meeting its own needs and then expanding to neighboring countries [12] Competitive Landscape - Yongjin does not foresee direct competition with Qingshan Group due to the long investment cycle and potential for future collaboration through equity partnerships [13] Price and Demand Trends - The recent increase in nickel prices has not led to a significant rise in downstream orders, as customers are cautious about inventory accumulation ahead of the Chinese New Year [14][17] - The company employs a price-locking model to mitigate risks from price fluctuations, which has limited the impact on operations [15] Inventory Management - Inventory levels across factories are stable, with only a few thousand tons on hand, preventing significant operational impacts from inventory fluctuations [15] Future Outlook - Yongjin is confident in maintaining stable domestic operations and anticipates that overseas business will face challenges in 2026, but not worse than in 2025. The target for production is set at approximately 3.8 million tons, an increase from 3.6 million tons in 2025 [18] Aerospace Sector Involvement - Yongjin has been tracking the stainless steel supply chain for the aerospace sector but has not yet established formal partnerships due to sensitivities related to foreign ownership [19] Additional Important Information - The project will be implemented in stages, with initial tasks focused on obtaining investment permits and preparing land for construction [5] - The company is aware of potential tariffs in the European and American markets and is taking measures to address these issues, including initiating anti-dumping investigations and planning to supply the EU market through Turkey [7][8]