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1H21: Record-high Results In Strong Steel Market; Declares Interim Dividend

Baosteel reported strong 1H21 results, with net profit boosted by 277% to Rmb15.7b, beating expectation. Gross margin expanded to 15.8% on strong steel ASP. Baosteel continues to strengthen its advantages in auto sheets and silicon steel products. Its interim dividend payout should serve as a positive surprise to the market. We expect margin to sustain into 2H21, as the decline in raw material cost is expected to outpace the potential correction of steel products prices. Raise target price to Rmb12.00, reiterate BUY.