Event: In 2023, revenue of 344.500 billion yuan, -6.33% YoY, net profit of 11.944 billion yuan, YoY -1.99%; 2023Q4 achieved revenue of 89.484 billion yuan, +5.08% YoY, -0.05% YoY, net profit to mother of 3.594 billion yuan, -5.37%, YoY +31.99%; 2024Q1 achieved revenue of 88.814 billion yuan, -9.69%, YoY +2.81%; Net profit to mother of RMB1,926 million, 4.6.41% YoY , +4.39% YoY. In 2023, the company's total annual dividend was 6.78 billion yuan, and the cash dividend ratio was 56.77%.

In 2023, the company's steel production was +4.19% year-on-year, and gross profit per ton of steel was +2.46%. In 2023, steel product output was 51.94 million tons, +4.19% year-on-year, of which coil production was 42.25 million tons, +4.24%, and long wood production was 4.58 million tons, +7.01%; in 2023, the gross profit per ton of steel products was 208 yuan, +2.46% year-on-year, of which the gross profit per ton of plate was 243 yuan, +17.16%, and the gross profit per ton of long materials was 22 yuan, turning a year-on-year loss into profit.

The four major bases continue to build production capacity for various types of steel, and the company's product structure is expected to continue to upgrade. As of 2023, (1) the company's four major bases have a production capacity of 1,225 million tons of steel: of which the Baoshan base has a production capacity of 600,000 tons of bar steel, 75,000 tons of oriented silicon steel, and the Qingshan base has a production capacity of 550,000 tons of unoriented silicon steel; (2) the company's four major bases have a proposed production capacity of 640,000 tons of grade steel: of which the Baoshan base has a production capacity of 220,000 tons of oriented silicon steel, 200,000 tons of unoriented silicon steel, and the Qingshan base. In April 2024, the zero-carbon high-grade thin steel plate project at the Zhanjiang base officially started.

The “Improve Quality, Efficiency, and Heavy Return” action plan was released, and great emphasis is placed on returning investors: “increasing investor returns” in the company's “improving quality, efficiency, and return” campaign mentions: (1) adhering to a high percentage of dividends; (2) increasing the frequency of dividends; (3) timely dynamic repurchases: Baosteel has carried out four repurchases since listing. The first three repurchases have accumulated 1,574 million shares, of which 1,212 billion shares have been cancelled. The total repurchases and cancellations after implementation are completed account for a total of 135 million shares to be repurchased. 5.6% In October 2023, Baosteel Co., Ltd. launched a share repurchase plan of no more than 3 billion yuan to continuously implement the equity incentive plan in the future. By the end of March 2024, the company had repurchased a total of 342 million shares through centralized bidding transactions. In the future, it will continue to promote the share repurchase plan, enhance investor confidence, and maintain the company's investment value.

In 2024, the company's key tasks are to accelerate the development of new quality productivity: the goals include: first business performance in the country; sales volume of “1+1+N” products of 30 million tons, export sales ratio of more than 10%; cost reduction of more than 3 billion yuan month-on-month; technology energy saving of 300,000 tons of standard coal; “scenario+AI” applications of at least 100; and major projects to achieve node goals.

Profit forecast, valuation and rating: We maintain Baosteel's 2024-2025 net profit forecast of 126.41 billion yuan and 14.553 billion yuan respectively, and add the 2026 net profit forecast of 16.972 billion yuan. As the industry leader, Baosteel Co., Ltd. will continue to optimize its product structure in the future to maintain the company's “gain” rating.

Risk warning: Demand for steel in the manufacturing industry has declined sharply; raw material prices have risen; production capacity construction for various steels falls short of expectations.