在石油化工行业疲软的商业环境下，利润受到挤压。

ProfitStrained on Soft Biz.Climate for Petrochemicals Rating (Maintain):OVERWEIGHTTarget price (RMB):5.40 Annual Results ReviewSpecialty Steel Huatai Research 18 May 2025│China (Mainland) AnalystLI BinSAC No.S0570517050001SFC No. BPN269libin@htsc.com+(86) 10 6321 1166 WujinStainless(Wujin)released2024and1Q25results:for2024,revenue/attributable NP came to RMB2,652/126mn (-24.57/-64.25% yoy), with thelattermissing our prior estimate of RMB282mn, chiefly due to lower demand forpetrochemicals than we expect. For 4Q24, revenue/attributable NP came in atRMB+562/-44.88mn(-29.37/-157.07%yoy,+0.57/-246.35%qoq).For1Q25,revenue/attributableNPwereRMB483/30mn(-33.90/-55.43%yoy,-14.06/+167.56%qoq).Aspotentialsupply-sidereformsforsteelindustryisapproaching, we think the company’s profit may recover. Maintain OVERWEIGHT. Key data 2024 profit strained on soft demand for petrochemicalsIn2024,weakdownstreamdemandforpetrochemicalsintensified marketcompetition, leading to soft product pricesand higher cost absorption amid lowerorder volumes.Wujin thus saw reduced yoy revenue andGPM. Petrochemicals,machinery, and other industries accounted for 70.69% of total revenuein 2024,withrevenuesfalling54.34%,23.34%,and10.46%yoy,respectively.CorrespondingGPMs stood at 15.91%, 15.68%, and 12.41%,which fell0.38pp,2.11pp, and 5.7ppyoy. In 1Q25, improved steel industry profitability (raw materialprices fell more sharply than steelprices) droveWujin’s sales GPM/NPM torebound to16.28/6.28%. Steel industry supply-side reforms likely to facilitate profit recoveryIn 2024, China's steel sector faced aconsiderablesupply glut,with CISA key enterprises' average sales margin at 0.71% (-0.63ppyoy). Chinese authoritieshave intensified policy guidance since 2024, emphasizing strict output control andpreventionof‘involutionary’competition,signalingpotentialaccelerationofsupply-side optimization. Per HuataiResearch steel team’sreport (Supply-SideOptimization Set to Resume in Steel Sector, dated 19 March 2025), iron oreentered arather loose cyclein 2024. Global iron ore capacity is projected toexpand further in 2025, potentially addingc.50mn tonnes of supply (excludingSimandou)via newly-commissioned projects, which mayfurtherdepress annualaverage iron ore prices andunderpinsteel industryprofitmargin recoveryfor2025, in our view.Additionally, Wind data shows China imported 2.56mn tonnes ofspecialty steel in 2024at an import value ofUSD5,248mn, highlightingthat Chinahas yet to realize import substitution for some high-end steel products.Withsubstantialunmetdemandgrowthpotential,China'sspecialtysteelindustrypresents strategic opportunities, in our view. Source:Wind Maintain OVERWEIGHTIn view of tepid demand in the petrochemical industry, we lower our 2025/2026 petrochemicalproductsalesvolumeandASPestimates,trimmingour2025/2026/2027 EPS projection by 28/26-% to RMB0.43/0.52/0.59. In view ofWujin’s leadership position in stainless steel pipes, we value the stock at 12.6x2025E PE, above its peers’ average of 10.9x on Wind consensus, for our targetpriceofRMB5.4(previous:RMB6.9,on11.5x2025EPE).MaintainOVERWEIGHT. Risks:weaker downstream demand than we expect; volatile raw-material prices;capacity rise weaker than we expect. 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 compensationof the analyst(s) was, is, or will be, directly or indirectly, related tothe inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong K ong) Limited (hereinafter referred to as “HFHL”).The information herein is strictly confidential to the recipient. This report is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merelyfrom his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter “Huatai”) makes no guarantee as to the accuracy or completenessof 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 outherein 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 may occur.Huatai makes no warrants that the information in this report be kept up to date. The information contained in this report maybemodified without notice by Huatai, and