China Securities News August 19 (Reporter Zhang Liangde) So far this year, although the entire steel industry has been under increasing operating pressure due to factors such as weakened market demand, high raw material prices, intensified international trade frictions, and declining performance, Nanjing Iron & Steel Co., Ltd. (600282.SH) has achieved growth against the trend in the first half of the year. This is the first "mid-term report card" since China CITIC Group became the company's actual controller.

Nanjing Iron & Steel Co. released a notice tonight that the company achieved operating income of 33.679 billion yuan in the first half of this year, a year-on-year decrease of 8.78%; net profit attributable to shareholders of the listed company was 1.233 billion yuan, a year-on-year increase of 24.70%. In the second quarter, net profit attributable to shareholders of the listed company was 679 million yuan, a quarter-on-quarter increase of 22.56%. In addition, the company plans to distribute a cash dividend of 1 yuan per 10 shares for the first half of the year, with a total dividend payment of 617 million yuan.

There are many factors affecting the company's profit growth. In addition to maintaining a high profit level in the company's steel industry, there is also relatively more increase in other income. In addition, management expenses and financial expenses have both decreased year-on-year.

As a leading domestic full-process steel joint venture, Nanjing Iron & Steel Co. has strong market competitiveness in medium-thick plates and special steel long materials. The products are widely used in oil and gas equipment, new energy, ships and marine engineering, automotive bearings and springs, construction machinery and rail transit, bridge and high-rise structure and other fields. The share of high-end manufacturing industry customers is relatively large. This has enabled Nanjing Iron & Steel to remain largely unaffected by the continued slump in real estate sales and the significant reduction in demand for construction steel.

Although Nanjing Iron & Steel's revenue declined in the first half of this year, the main reasons were the decline in steel prices and sales volume, and the fact that WanSheng Co. (603010.SH) will no longer be included in the consolidated statements this year.

After "streamlining," Nanjing Iron & Steel performed better than the same period last year in some financial data. The company's sales gross margin in the first half of the year was 11.15%, a slight increase from the same period last year's 10.55%, and the sales net profit margin also increased from 2.98% in the same period last year to 3.66%. The company's management expenses have been reduced from 840 million yuan last year to 668 million yuan, and the total amount of employee compensation has also decreased.

In the face of the current steel industry's obstacles of weak social expectations, insufficient effective demand, and structural overcapacity, and the situation that iron ore, coking coal, and coke prices have higher elasticity than steel prices, steel companies' profitability has sharply declined, and industry competition is becoming increasingly fierce. In this environment, the market has put higher requirements on steel companies' operating strategies, product structure, and cost control.

As for why the company's products can maintain a relatively high gross profit margin, Nanjing Iron & Steel said that on the one hand, the company's high-end products have strong anti-cyclical fluctuation capabilities. In the first half of this year, the sales volume of advanced steel materials was 1.2978 million tons, accounting for 27.14% of the total sales volume of steel products, an increase of 1.96 percentage points year-on-year, with a gross profit margin of 17.94%, an increase of 1.61 percentage points year-on-year. On the other hand, the company focuses on a diversified industry related to steel, and some subsidiaries' business conditions are better. Jin'an Mining achieved a total profit of RMB 360 million in the first half of 2024, and Baizhong Environment achieved a total profit of RMB 153 million. At the same time, the company has further optimized its raw material structure, significantly lowered the cost and improved the stability of molten iron, reduced the consumption of steelmaking materials at the finished product end, reduced costs in the alloy process, raised the yield rate, and other aspects have demonstrated significant successes. During the reporting period, the M process cost of the company decreased by RMB 1.094 billion compared with the same period last year.

At the same time, the national financial and tax policies supporting high-tech enterprises are also one of the factors contributing to the company's profit growth. The company achieved other income of RMB 311 million in the first half of the year, a year-on-year doubling growth. This part of the income mainly comes from the VAT credit offset of advanced manufacturing enterprises. In September of last year, the Ministry of Finance issued the "Announcement on VAT Credit Offset Policy for Advanced Manufacturing Enterprises," which allows advanced manufacturing enterprises to deduct 5% of the current deductible input tax amount to offset the payable VAT amount.

しかしながら、国際政治や経済状況が急速に変化する状況で、企業の輸出入業務や海外子会社の収益は、大幅な為替レートの変動リスクに直面しています。

上半期における同社の鉄鋼製品の受注量は81.6万トンで、前年同期比で64％増加し、輸出量は68.5万トンで、前年同期比で31％増加し、いずれも史上最高の記録を更新しました。高い製品利益を得る一方で、一定の為替リスクも発生しています。今年2Qには、人民元/ドルの為替レートが全体的に上昇しました。しかし、人民元が基本的に安定している状況下で、一部の国々で為替レートの変動が大きく、より大きな為替リスクは、同社の海外投資の収益の変動から主に発生しています。同社は、青山工業団地で海外焦炭生産ベースを構築し、インドネシアのJinrui New EnergyとJinxiang New Energyの合弁会社を設立し、年間650万トンの焦炭プロジェクトを建設しました。インドネシアルピアが米ドルに対して下落したため、同社の海外外貨両替損益は、昨年同期の2.1億から今年上半期の-5645万に減少しました。

全体的に、昨年末に同社の実質支配権が中信集団に変更された後、同社は最初のプラス成長の「中期成績報告書」を提出しました。同社は、核心管理チームまたは主要技術者の離職、機器または技術の更新、フランチャイズ権の喪失などが原因で、同社の核心競争力が深刻な影響を受けることはありませんでした。