[performance summary] Steel companies generally made profits in the first half of the year, but the increase in the price of raw materials led to a decline in profits

A summary of semi-annual performance forecasts has been issued recently:

Explanation of the main reasons for the change in performance

Valin Iron and Steel: affected by the Xinguan pneumonia epidemic in the first quarter of 2020, the profits of iron and steel enterprises dropped sharply compared with the same period last year, the epidemic was effectively controlled in the second quarter, and the demand for downstream steel gradually recovered, but the price of raw materials rose rapidly. Under the pressure of the adverse effects of the epidemic and the rising cost of raw materials, the company continued to promote the three strategic support systems of lean production, the integration of marketing, research and production, and the construction of a marketing service system, increased the adjustment of product structure, and greatly improved its business performance in the second quarter. Net profit belonging to shareholders of listed companies increased by 58% and 76% from the previous quarter. The company expects to realize the net profit of 2.93 billion yuan to 3.13 billion yuan belonging to the shareholders of the listed company in the first half of 2020.

Linggang shares: the main reason for the sharp decline in the company's half-year performance in 2020 is the impact of the main business. In the first half of the year, the company minimized the impact of the epidemic on output, worked hard to overcome the unfavorable factors of rising raw fuel prices such as imported and local mines, and reduced consumption and costs through fine and full-caliber standards. However, as the decline in steel prices was greater than the decrease in the cost of sales, steel prices fell 6.84% year on year, 4.10 percentage points higher than the cost of sales; steel production and sales decreased by 4.38% and 6.63% respectively, leading to a decline in economic benefits.

Angang shares: in the first half of the year, due to the impact of the new crown pneumonia epidemic, the demand for steel products was weak, sales prices fell, raw material prices rose periodically, steel profit margins were compressed, and the company's profits declined compared with the same period last year.

Shougang shares: since the beginning of this year, due to the impact of the overall economic environment and epidemic situation, the price of raw fuel such as iron ore upstream is relatively high, the demand for downstream steel products has weakened, and steel prices have fallen sharply compared with the same period last year. In the face of the severe market situation, the company insists on both epidemic prevention and management. While stabilizing the situation of production and operation, the company increases the optimization of product structure and cost control, but the reduction of cost and efficiency has not completely offset the reduction of profits in the supply and demand market. Operating performance has declined.

3 Steel Minguang: 1) in the first half of 2020, due to the impact of the new crown epidemic, steel demand was delayed, steel inventory increased, steel prices decreased, and the overall steel prices dropped greatly in the first half of the year compared with the same period last year, while iron ore and other raw fuel prices fell slightly compared with the same period last year, resulting in a decline in steel gross profit margin; at the same time, the company's steel production and sales decreased in the first half of the year compared with the same period last year, resulting in a decline in the company's economic benefit.

2) on June 19, 2020, the company's second interim shareholders' meeting in 2020 approved the company's cash acquisition of 100% equity in Fujian Luoyuan Minguang Iron and Steel Co., Ltd. (hereinafter referred to as Luoyuan Minguang). June 28, 2020, Luoyuan Minguang 100% equity transfer change registration procedures completed, Sangang Minguang acquired and held Luoyuan Minguang 100% equity, Luoyuan Minguang into the scope of the company's consolidated statement. According to the Accounting Standards for Enterprises and its related regulations, because this transaction belongs to the merger of enterprises under the same control, the consolidated profit statement of Luoyuan Minguang from January to June 2020 includes Luoyuan Minguang's profits in June 2020. The comparative data of the same period last year, that is, the semi-annual operating data of 2019, also need to be adjusted retroactively. The company's operating data from January to June 2019 also need to include Luoyuan Minguang's operating data from January to June 2019. The company estimates that the net profit attributed to shareholders of listed companies in the first half of 2020 is 47.25% lower than that in the same period last year (based on the financial data adjusted by business mergers under the same control). It is estimated that the range of net profits belonging to shareholders of listed companies from January to June 2020 will be between 1.05 billion yuan and 1.35 billion yuan.

Citic Pacific Special Steel: during the reporting period, the net profit belonging to shareholders of listed companies increased compared with the same period last year (before the retroactive adjustment of restructuring), mainly due to the impact of the company's completion of issuing shares to purchase assets in September 2019. The net profit belonging to the shareholders of the listed company during the reporting period is basically the same as that after the retroactive adjustment of the restructuring in the same period last year, and there has been no significant change.

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