China Oriental Group Company (581) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 was RMB22.57 billion, up 2.3% year-over-year, but net profit dropped 55.4% to RMB123 million due to lower steel prices, high costs, and fair value losses on financial assets.

• Gross profit increased, with figures reported as RMB643 million (+14.4% YoY) and RMB900 million (+25.2% YoY), and gross margin improved to 4.9% (from 4.0% YoY).

• EBITDA decreased to RMB815 million from RMB1.05 billion YoY, and basic EPS was RMB0.03, down from RMB0.08.

• The Group maintained a strong financial position, with cash and cash equivalents of RMB5.35 billion and unutilised banking facilities of RMB15.1 billion as of 30 June 2024.

• No interim dividend was declared for 2024; a special dividend for 2023 was paid in August 2024.

Financial highlights

• Revenue: RMB22.57 billion (+2.3% YoY); gross profit: RMB643 million (+14.4% YoY) or RMB900 million (+25.2% YoY); net profit: RMB123 million (-55.4% YoY).

• EBITDA: RMB815 million (down from RMB1.05 billion YoY); basic EPS: RMB0.03 (down from RMB0.08 YoY).

• Gross profit margin improved to 4.9% (from 4.0% YoY), mainly due to a change in depreciation estimates.

• Net assets: RMB24.93 billion; total assets: RMB52.21 billion.

• Cash and cash equivalents: RMB5.35 billion; current ratio: 1.4x; gearing ratio: 52.2%.

Outlook and guidance

• The Group expects the steel industry to face continued weak demand and price pressure in 2H 2024, but anticipates gradual improvement in the business environment.

• Focus remains on cost reduction, efficiency, green development, and expanding high value-added products.

• Plans to continue investments in environmental protection, equipment upgrades, and exploring M&A opportunities.