2024H1's revenue was 33.679 billion yuan, down 8.78%; net profit to mother was 1.233 billion yuan, up 24.70%; 2024Q2 revenue was 16.806 billion yuan, down 11.64% and 0.39%; net profit to mother was 0.679 billion yuan, up 10.85% from the same period, and 22.65%.

Steel exports continue to grow, and Indonesia's coke releases performance. 2024H1 achieved steel production of 4.7872 million tons, a decrease of 6.96%; steel sales volume of 4.7828 million tons, a decrease of 7.06%; the company received export orders of 0.816 million tons, an increase of 64% year on year; and export volume of 0.685 million tons, an increase of 31% year on year, all of which set the best record in history. In addition to traditional steel, 2024H1's sales volume of advanced steel materials was 1.2978 million tons, accounting for 27.14% of total sales of steel products, accounting for an increase of 1.96pct over the previous year. In addition, Indonesia's Jinrui New Energy's 4 coke ovens have all been put into operation. Indonesia's Jinxiang New Energy 1 #、2 #、3 #焦炉均已投运，4 #焦炉正在烘炉中，上半年印尼金瑞新能源焦炭销量1 .1315 million tons, achieving operating income of 3.007 billion yuan and net profit of 36.2939 million yuan.

Revenue declined year over year, and gross margin rose slightly. The company achieved operating income of 33.679 billion yuan, a year-on-year decrease of 8.78%, mainly due to lower steel sales and prices. During the reporting period, the company's gross margin was 11.15%, an increase of 0.6 pct, mainly due to the increase in the share of high-end products; among them, the gross profit margin of advanced steel was 17.94%, an increase of 1.61 pct over the previous year; the total gross profit of advanced steel was 1.334 billion yuan, accounting for 43.48% of the total gross profit of steel products, accounting for a 1.10 pct increase over the previous year.

Expenses increased during the period, and performance increased year-on-year. The company's cost rate for the period was 7.29%, up 0.42pct. Among them, the sales expense ratio was 0.73%, up 0.09pct, mainly due to the year-on-year increase in production and sales of Indonesia's Jinrui New Energy and the increase in logistics costs; the management fee ratio was 1.98%, down 0.29pct, mainly due to the same period last year; the financial expense ratio was 0.79%, up 0.04 pct, mainly due to lower financing costs; and the R&D expense ratio was 3.79%, which increased 0.57 pct, mainly due to increased investment in R&D. The company's impairment losses totaled 0.099 billion yuan in the first half of the year, a year-on-year decrease of 0.131 billion yuan. Overall, net profit to mother was 1.233 billion yuan in the first half of the year, an increase of 24.70% over the previous year.

Cash flow has deteriorated, and the balance ratio has declined. The company's revenue ratio was 0.7539, an increase of 1.03 pct, mainly due to an increase in cash repayment from business; the payout ratio was 0.7192, an increase of 1.79 pct, mainly due to the increase in the company's cash payments for raw materials. Overall, the net operating cash inflow was 1.107 billion yuan, a year-on-year decrease of 1.504 billion yuan; the net outflow from investment activities was 2.882 billion yuan, an increase of 0.437 billion yuan over the previous year, mainly due to the year-on-year decrease in the scale of cash management.

The company's balance ratio was 60.56%, down 0.72 pct from the end of last year, mainly due to a decrease in long-term and short-term loans.

Investment advice: The company's advanced steel has significant advantages, its share continues to increase, and its coke production capacity continues to be released. The company is expected to achieve net profit of 2.405, 2.666, and 2.918 billion yuan in 2024-2026, corresponding PB of 1.0, 0.9, and 0.8 times, maintaining an “increase in holdings” rating.

Risk warning: risk of raw material price fluctuations, downstream demand falling short of expectations, Indonesian coke project falling short of expectations.