CITIC Steel(000708) 国盛证券·2024-10-26 12:23Investment Rating - The report maintains a "Buy" rating for CITIC Special Steel (000708 SZ) due to its leading position in the special steel industry and its strong capacity integration capabilities [1][4] Core Views - The company's Q3 2024 performance declined, with revenue of 83 504 billion yuan, down 3 37% YoY, and net profit attributable to shareholders of 3 836 billion yuan, down 12 3% YoY [1] - Despite the decline, the company demonstrated resilience with a limited drop in net profit compared to the industry's 215 9% YoY decline in profits from January to August 2024 [1] - The gross profit margin improved sequentially, with Q3 2024 gross margin at 12 51%, up from 12 30% in Q2 2024 [1] - Export sales are expected to increase, with export volume reaching 1 1246 million tons in H1 2024, accounting for 11 8% of total sales, and a target of 2 8 million tons for 2024, up 17 6% YoY [1] - The special steel industry is poised for growth due to manufacturing upgrades and intelligent transformation, with strong demand for domestic special steel replacing imports [1] Financial Performance - Revenue for 2024E is projected at 113 294 billion yuan, with a slight decline of 0 6% YoY, while 2025E and 2026E revenues are expected to grow by 5 7% and 3 5% respectively [3] - Net profit attributable to shareholders is forecasted at 5 378 billion yuan for 2024E, down 6 0% YoY, with growth of 11 0% and 5 8% expected in 2025E and 2026E respectively [3] - EPS for 2024E is estimated at 1 07 yuan, increasing to 1 18 yuan in 2025E and 1 25 yuan in 2026E [3] - The company's P/E ratio is projected at 11 8x for 2024E, decreasing to 10 7x in 2025E and 10 1x in 2026E [3] Industry Outlook - The special steel industry is entering a mature phase, with significant growth potential driven by manufacturing upgrades and intelligent transformation [1] - Domestic demand for special steel is expected to remain robust, supported by the replacement of imported special steel [1] Valuation and Forecast - The company's valuation is supported by its focus on high-end special steel manufacturing, improving product structure, and downstream manufacturing upgrade demand [1] - Forecasted net profit for 2024E to 2026E is 5 38 billion yuan, 5 97 billion yuan, and 6 31 billion yuan respectively, with corresponding P/E ratios of 11 8x, 10 7x, and 10 1x [1][3]