Baosheng(US:BAOS)2023-09-02 01:14Financial Data and Key Metrics Changes - The company reported a net profit of approximately RMB 6.52 billion, with revenue reaching about RMB 170.2 billion, and net profit attributed to the parent company at RMB 4.55 billion [4] - Cash flow from operating activities, excluding finance company, was RMB 11.31 billion, with EBITDA at RMB 17.12 billion and EPS at RMB 0.2, while ROE stood at 2.32% [4] - Year-on-year profit decline was primarily due to a reduction in steel sales prices, resulting in a decrease of RMB 18.1 billion compared to the same period last year [5] Business Line Data and Key Metrics Changes - The company achieved a profit per ton of steel percentile value of 93 in Q2, indicating strong operational performance despite market challenges [6] - Sales of homogeneous products were enhanced, with a focus on high-profit and high-market share products [9] - The integration of R&D and sales led to an increase in sales volume, with total sales reaching 12.28 million tons, an increase of 600,000 tons compared to the same period last year [11] Market Data and Key Metrics Changes - The company noted a significant decline in the overall steel industry, with a 45% loss rate among CISA member companies and a year-on-year decline in total profit of ferrous metal smelting at -97.6% [4] - The demand in the auto industry, shipbuilding, and home appliances remained stable, while the real estate and construction machinery sectors faced declining demand [19] Company Strategy and Development Direction - The company is focusing on overseas expansion, particularly in the Middle East, with a significant project in Saudi Arabia aimed at establishing a green low-carbon steel production facility [42][45] - Emphasis on technological innovation and differentiation in product offerings to enhance competitiveness in the market [33] - The company plans to deepen the transformation of production, sales, and research to better align with market demands and improve operational efficiency [21] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing pressure in demand and indicated that the second half of the year is expected to mirror the first half in terms of performance [18] - The company anticipates a stable production capacity with a focus on maintaining profitability despite market fluctuations [19] - Management highlighted the importance of cost control and operational efficiency as key areas of focus moving forward [22] Other Important Information - The company achieved a reduction in costs amounting to RMB 2.99 billion in the first half of the year, with energy consumption contributing over RMB 0.7 billion to this reduction [11] - The company has been recognized for its ESG efforts, ranking fourth among China's ESG listed companies and first in the manufacturing industry [17] Q&A Session All Questions and Answers Question: What is your future overseas expansion goal in terms of timetable? - The company is committed to building the Saudi Arabia project into the world's first green low-carbon fixed plate steel project, focusing on collaboration with partners and exploring other overseas opportunities [42][44] Question: How will the management system change with the operation center? - The operation center aims to optimize resource allocation across multiple bases, enhancing efficiency and minimizing downtime in production [51][53] Question: How can you ensure good auditing results and quality to manage risk? - The company emphasizes a strong finance team and a sound internal control system to ensure accurate and reliable financial reporting [56][60] Question: How is the capacity development towards the 80 million tons goal for 2024? - The company plans to achieve this growth through high-quality development and potential M&A activities to optimize resource utilization and enhance production capabilities [66]