Event: The company announced its H1 2025 semi-annual report. In the first half of 2025, the company achieved operating revenue of 54.715 billion yuan, down 4.02% year-on-year, and net profit attributable to shareholders of 27.98 billion yuan, up 2.67% year-on-year. Net profit attributable to shareholders after excluding non-recurring gains and losses was 27.69 billion yuan, up 3.77% year-on-year. In Q2 2025, operating revenue reached 278.75 billion yuan, down 2.45% year-on-year and up 3.86% quarter-on-quarter. Net profit attributable to shareholders was 14.14 billion yuan, up 3.58% year-on-year and 2.21% quarter-on-quarter. Net profit attributable to shareholders excluding non-recurring items was 13.95 billion yuan, up 4.87% year-on-year and 1.60% quarter-on-quarter.

H1 2025 Steel Sales Volume Up 3.23% Year-on-Year: In the first half of the year, the company achieved steel sales of 98.226 million tons, up 3.23% year-on-year, including steel exports of 11.216 million tons, remaining flat year-on-year. If the annual planned sales volume of 186 million tons is achieved, the second half sales volume is expected to be 87.774 million tons, down 6.37% year-on-year and 10.64% quarter-on-quarter.

H1 2025 Steel Product Price Per Ton Down 7.02% Year-on-Year, Gross Profit Per Ton Up 8.56% Year-on-Year: In the first half, the company's steel product selling price per ton was 5,570 yuan, down 7.02% year-on-year and up 0.04% quarter-on-quarter. The gross profit per ton of steel products was 800 yuan, up 8.56% year-on-year and 6.94% quarter-on-quarter, with steel product gross margin at 14.37%, up 2.06 percentage points year-on-year and 0.93 percentage points quarter-on-quarter.

Actively Seizing Opportunities in Energy and Other Industries with Strong Demand, Adjusting Product Structure: In the first half, the company actively seized opportunities from strong demand in wind power, oil and gas, hydrogen energy, pumped storage, and new energy vehicles industries, actively adjusting its product structure. Automotive steel bar and wire rod sales reached 2.85 million tons, flat compared to the same period last year. Wind power round billet sales were 1.592 million tons, up 2.6% year-on-year. Special welding wire steel sales increased 21% year-on-year. Energy steel products achieved significant improvement in energy project shortlist inclusion rates, with all China Petrochemical Corporation and China National Petroleum Corporation projects under construction included, and coal chemical projects achieving over 90% inclusion rate. Key developed "Little Giant" products achieved sales of 3.688 million tons, bearing steel sales of 1.146 million tons, up 13.2% year-on-year, and "Two High One Special" product sales up 5% year-on-year.

Accelerating International Project Implementation, Key Projects Achieving Phased Progress: As of H1 2025, some of the company's key international projects have achieved phased progress. In the second half, the company will further accelerate overseas project implementation, promote strategic management upgrades, and build momentum for long-term development.

Enhancing Shareholder Return Frequency, Implementing Semi-Annual Dividend: The company plans to implement a 2025 semi-annual dividend to increase the frequency of shareholder returns, enabling shareholders to share in corporate growth dividends more promptly and strengthening the long-term value-sharing concept. The H1 2025 cash dividend totaled 1.009 billion yuan, with a payout ratio of 36.07%.

Earnings Forecast, Valuation and Rating: As a leader in the specialty steel industry, Citic Pacific Special Steel Group Co.,Ltd. maintains consistently stable performance. We maintain our net profit attributable to shareholders forecasts for 2025-2027 at 55.90, 62.36, and 68.25 billion yuan respectively. With continued optimization of the company's product structure and accelerated overseas project implementation, profitability is expected to further improve. We maintain a "Buy" rating.

Risk Warning: Significant increase in raw material prices; steel demand from automotive, bearing, and energy industries declining more than expected.