The net profit of 23H1 is-36.8% compared with the same period last year, while the revenue of 23H1, a "buy" rating company, is 36.92 billion yuan (yoy+3.7%), and the net profit of 23Q2 is 989 million yuan (yoy-36.8%). The net profit of 23Q2 is 613 million yuan (yoy-24.9%, qoq+62.9%).

We estimate that the EPS of the company in 23-25 is 0.42, 0.50, 0.58 yuan respectively, and the average PE (2023E) of the comparable company is 8.22X. Considering the continuous improvement of the product structure of the company, we give the company 10.5X PE for 23 years, corresponding to the target price of 4.41 yuan (the previous value is 4.37 yuan), and maintain the "buy" rating.

The gross margin of 23Q2 per ton steel has been significantly improved and the profit toughness has been shown.

According to the company's semi-annual report, 23H1's steel production and sales volume were 514.53 and 5.1464 million tons respectively (yoy+5.17%, + 8.04%), completing 48.54% of the annual plan, with a gross profit of 603 yuan per ton of steel (yoy-151 yuan / ton). Among them, the gross margin of 23Q2 steel per ton is 702 yuan / ton (yoy-96 yuan / ton, qoq+202 yuan / ton), and the month-to-month ratio is obviously improved. Overall, 23H1 has a gross profit margin of 10.55% (yoy-1.21pct) and an expense rate of 6.87% (yoy+0.97pct), mainly due to the company's continued increase in R & D investment, with a R & D expenditure rate of 3.22% (yoy+0.48pct) and a net sales profit rate of 2.98% (yoy-1.52pct), which is higher than the industry average net sales profit rate of 1.03%.

The volume of core advantage products and the profit contribution of advanced iron and steel materials continue to increase 23H1's sales of advanced steel materials by 1.2955 million tons (yoy+45.97%), maintaining rapid growth, accounting for 25.18% of total steel sales, and further increasing 6.55pct, gross profit margin of 16.80% (yoy-0.47pct), ton gross margin of 1015 yuan / ton (yoy-33 yuan / ton), remaining relatively stable. 23H1 advanced iron and steel materials contribute a total profit of 1.315 billion yuan, accounting for 42.38% of the total gross profit of steel products, which is the most powerful support for the company's profit resilience. The company has obvious competitive advantages in the plate field. During the reporting period, 14 high-end products, such as super-thick and super-tolerant steel, achieved 0-1 breakthroughs and industrialization, and obtained a number of customer certification at home and abroad.

The coke project is progressing steadily and the performance is gradually released.

During the reporting period, No. 1, No. 2 and No. 3 coke ovens of Indonesia's Jinrui New Energy 2.6 million tons coke project have been put into operation, and No. 4 coke ovens are being built. 23H1 achieved coke sales of 597500 tons and a net profit of 70.6861 million yuan.

Indonesia Jinxiang New Energy 3.9 million tons coke project No. 2 coke oven has been lit and dried, No. 1 coke oven has been equipped with drying conditions, No. 3 coke oven has been completed, No. 4 coke oven is ready to start, and the rest of the coke oven and its supporting facilities are being carried out in sequence.

Mathematical Intelligence Nanjing Iron and Steel Co., Ltd. has made another breakthrough in its strategy to help reduce cost and increase efficiency.

During the reporting period, the company made substantial progress in data governance and other aspects, realizing the standardized stocktaking of data in 8 key areas and entering the lake, and the trial operation of the data asset center in the lake; in terms of industrial Internet, new industrial information system, plate full-process intelligent manufacturing and other projects are online. The company's "intellectual change" continues to promote cost optimization, helping to reduce process costs by 743 million yuan and purchasing costs by 102 million yuan compared with the same period last year.

Risk hint: downstream demand is lower than expected, raw material prices fluctuate sharply, and capacity release is not as expected.