Event: The company publishes its 2024 semi-annual report. The company achieved operating income of 33.679 billion yuan in the first half of the year, a year-on-year decrease of 8.78%; net profit attributable to shareholders of listed companies was 1.233 billion yuan, an increase of 24.7% over the previous year; and basic earnings per share were 0.2 yuan, an increase of 24.72% over the previous year.

Profits grew steadily, and net profit margins improved month-on-month. The company achieved net profit of 0.679 billion yuan in the second quarter of 2024, up 10.85% year on year and 22.65% month on month, achieving net profit without return to mother of 0.589 billion yuan, a decrease of 6.16% year on year and an increase of 37.94% month on month; steel prices operated low in the first half of 2024, industry profit declined year on year, and the company's net profit to mother grew steadily year on month, showing the company's outstanding profitability. The company's 2023Q3-2024Q2 quarterly gross sales margins were 10.78%, 10.50%, 10.30%, and 12.00%, respectively, and quarterly net sales margins were 3.71%, 2.62%, 3.29%, and 4.03%, respectively. Benefiting from measures such as continuously optimizing the product structure, improving lean production levels, forging agile management systems, and tapping the potential for cost reduction and efficiency, gross margin and net margin improved markedly.

The production structure has changed, and the proportion of high value-added products has increased. The company achieved steel production of 4.7872 million tons in the first half of 2024, down 6.96% year on year; steel sales volume was 4.7828 million tons, down 7.07% year on year. In the first half of the year, the company overcame the impact of blast furnace maintenance and organized lean production centered on economic efficiency. The proportion of construction thread production in the first half of the year was 14.49%, down 5.44 pcts from the full year of 2023, accounting for 14.92% of sales; the company's advanced steel materials sales volume in the first half of the year was 1.2978 million tons, accounting for 27.14% of total sales of steel products, accounting for 1.96 percentage points; gross profit margin was 17.94%, up 1.61 percentage points year on year; export orders for steel products were 0.816 million tons, up 64% year on year, and export volume 0.685 million tons, up 31% year on year, all setting record records; in addition, the company laid out coke projects with a total annual output of 6.5 million tons around the upstream industry chain. Indonesia's Jinrui New Energy coke sales during the reporting period 1.1315 million tons, achieving operating income of 3.007 billion yuan and net profit of 36.2939 million yuan.

It was merged into a powerful alliance of central enterprises, and its high dividend attributes stand out. The company issued an announcement on December 5, 2023. The actual controller of the company was changed from Mr. Guo Guangchang to CITIC Group. After joining the CITIC Group, the company system changed from mixed ownership to central enterprise holding. It can fully rely on the advantages of shareholders' resource platforms to promote complementary advantages, resource sharing, and mutual assistance between the two sides in areas such as main business collaboration, new industry chains, and financial resource sharing. After the actual controller of the company was changed, the high dividend attribute was still prominent. According to the company's announcement, it is planned to distribute a cash dividend of 0.10 yuan per share to all shareholders in the first half of 2024, for a total cash dividend of 0.617 billion yuan (tax included), accounting for 50% of the net profit attributable to shareholders of listed companies in the first half of 2024.

Investment advice. The company focuses on the manufacture of high-end special sheets and special steel materials, benefiting from improved product structure, shareholder empowerment and rising downstream sentiment. Its profit showed steady growth characteristics. Referring to the company's valuation changes in the past three years, the central valuation region in the past three years corresponds to a market value of about 31.3 billion, and the high-valuation region has a market value of about 49.3 billion. Currently, the company is in a low value region. If later financial implementation is accelerated, or supply-side industrial policies are introduced, we believe there is an opportunity for the company's valuation to be repaired in the future. grade.

Risk warning: Prices of upstream raw materials have risen sharply, demand for steel falls short of expectations, and there is uncertainty about the development of new businesses.