钢铁行业利润改善推动环比盈利反弹。

ImprovedProfits in Steel IndustryLedtoQoqEarningsRebound Rating (Maintain):OVERWEIGHTTarget price (RMB):3.98 Huatai Research Quarterly Results Review 18 May 2025│China (Mainland) General Steel AnalystLI BinSAC No.S0570517050001SFC No. BPN269libin@htsc.com+(86) 10 6321 1166 XinxingPipes’1Q25revenue/attributablenetprofit(NP)/recurringNPwereRMB8,375/137/121mn(-8.21/-19.84/+99.29% yoy,-8.11%/+143.36%/-qoq). Wemaintain OVERWEIGHT as we anticipate potentialearningsrecovery, consideringthe approaching resumption of supply-side optimization inChina’ssteel industry. Key data 1Q25 earnings improved qoqIn 1Q25, XinxingPipes intensified efforts in operational efficiency enhancement, reinforcing product differentiation and premiumization strategy for ductile ironpipes.Ithascontinuedtoexpandmarketsharefornewproductswhilesystematically increasing specialty steel ratios. Xinxing strengthened its leadershipin China’s ductile pipe bidding markets, with steel products maintaining industry-leading cost competitiveness and profitability.Chinese steelmakers have seenmargin expansion for the quarter, primarily dueto faster raw material price declinesvs steel products. CISA’s CSPI steel price index averaged 95.61 in 1Q25 (-13.05%yoy). Main raw materials Platts 62% iron ore index averaged USD103.64/tonne(-16.12%yoy),whileAnzehardcokingcoal/Rizhaoportquasi-gradecokeaveraged RMB1,380.68/1,516.27 per tonne (-41.43/-31.81% yoy). Consequently,Xinxing’s total operating costs decreased 10.74% yoy, outpacing revenue declineof 8.21% yoy. Sales gross margin expanded 2.77pp qoq to 7.61%, with all expenseratios showing qoq gains. This drove 1Q25 net margin up 6.81pp qoq to 1.83%. Sector profitspoised for continued recoveryon supply optimizationIn 2024, thesteelindustryin Chinafaced severe oversupply, with CISA member mills’average sales margin at 0.71% (-0.63ppyoy). Since 2024, policymakershave reiterated strict production control to preventover-competition, signalingpotentialsupply-sidereforms.AsoutlinedinHuataiSteelTeam’sreportSupply-Side Optimization Set to Resume in Steel Sectordated 19 March 2025,global iron ore capacity expansion (excluding Ximangdu project) may addc50mntonnes supply in 2025, potentially driving iron ore prices lower. We consequentlyexpectChinesesteelmakers’margins to continue recovering in 2025. Source:Wind MaintainOVERWEIGHTWe maintain earnings forecasts, projecting 2025/2026/2027 EPS at RMB0.18/0.24 /0.26, and BVPS at RMB6.57/6.74/6.90.We value the stock at 0.61x 2025E PE,above its peers’ average of 0.52x on Wind consensus, considering the company’sductile iron pipe exposure to robust water conservancy investments, for our targetprice of RMB3.98(previous: RMB4.48on 0.68x 25E PB). Maintain OVERWEIGHT. Risks: significant fluctuations in raw-material prices; domestic policy risks. Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, LI Bin, hereby certify that the views expressed in this report accurately reflect the personal views of the analyst(s) about thesubject securities or issuers; and no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly,related tothe inclusion of specific recommendations or views inthis report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) Limited (hereinafter referred to as “HFHL”). The information herein is strictly confidential to the recipient. This reportis intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, butHFHL and its associated company(ies)(collectively, hereinafter “Huatai”) makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. Huataimay issue research reports that contain inconsistent views, assessments and projections with those set out herein at differenttimes. The prices, values and investment returns of the securities or investment instruments referred to herein may fluctuate.Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital mayoccur.Huatai makes no warrants that the information in this report be kept up to date. The information contained in this report may bemodified without notice by Huatai, and investors shall pay attention to such updates or modifications when necessary. HFHL is not a U.S. Financial Industry Regulatory Authority (“FINRA”) member firm, and HFHL research analysts arenotregistered/qualified as research analysts with FINRA. While every effort has been made by Huatai to ensure the content contained herein is objective and impartial, the views,conclusions and recommendations