The leading position is stable, and "double carbon" provides new opportunities

Ccid, a subsidiary of MCC, has researched and developed low-carbon metallurgy for more than ten years and has fully independent intellectual property rights of hydrogen metallurgy. Since 2008, CCID has carried out research on low-carbon smelting process, and has carried out a lot of technological research and development in green and low-carbon new processes and core equipment such as hydrogen injection in all-oxygen blast furnace, gas cycle, gas-based non-blast furnace ironmaking, green high-efficiency electric arc furnace steelmaking, etc., with fruitful technical achievements. In the field of hydrogen metallurgy, CCID proposed to "hydrogen energy preparation → hydrogen energy smelting →CCUS (carbon capture)" as the main line, through hydrogen rich reduction of low carbon blast furnace, hydrogen base shaft furnace direct reduction, based on efficient pre-reduction of hydrogen base melting reduction of three major technical paths, to achieve green low hydrogen metallurgy technology roadmap. Up to now, CCID has carried out a number of studies on all aspects of the hydrogen metallurgy technical route, and has mastered the completely independent intellectual property rights of China's iron and steel industry in the field of green and low hydrocarbon metallurgy technology. In October 2020, MCC CCID signed a hydrogen metallurgy strategic alliance with Tianjin Rongcheng Iron and Steel, Northeastern University and other units, committed to building the world's first hydrogen metallurgy demonstration steel plant based on tempered co-production. According to the carbon reduction roadmap formulated by CCID, it is expected that by 2030, the goal of reducing CO₂ emissions ≥35% by hydrogen-rich reduction low-carbon blast furnace and reducing CO₂ emissions ≥60% by hydrogen-based direct reduction is achieved. Zero-carbon smelting will be realized by further developing carbon capture and utilization technology (CCUS) in the future. At present, CCID has cooperated with a number of backbone iron and steel enterprises to carry out projects such as blast furnace hydrogen injection and hydrogen-based shaft furnace, and the follow-up is expected to accelerate the process of hydrogen metallurgy technology localization.

Technical strength + customer resources leading in the industry, is expected to fully benefit from the green and intelligent development of the industry. As a leader in the metallurgical process, the company has a high market share in the segment market (90% of the domestic market share of large projects), rich customer resources (serving the vast majority of steel enterprises), and outstanding technical reserves and implementation capabilities in steel energy conservation and emission reduction, upgrading and intelligent upgrading, and is expected to fully benefit from the steel industry's energy saving and consumption reduction transformation demand growth in the short term. In the long run, under the constraints of the dual-carbon goal, low-carbon smelting technology with hydrogen metallurgy, CCUS and other technologies as the core is expected to replace the traditional coal metallurgy process. The company has rich technical reserves and research and development achievements, and has won the bid for the first hydrogen energy development and utilization demonstration project, which is expected to continue to lead the development of hydrogen metallurgy industry and stabilize the leading position of metallurgical engineering.

4. Non-steel engineering: the market share of central enterprises continues to increase, and the emerging business potential is huge

The contribution ratio of non-steel plates continued to increase, and the housing construction income accounted for about 68%. In 2022, the company signed new project orders of 130.4 billion yuan, of which non-steel orders accounted for 85%, continuing to maintain a high proportion. In terms of revenue proportion, non-steel business accounts for about 76% of the total revenue of the company's engineering sector in 2022, of which housing construction/infrastructure/emerging industries account for 68.3%, 25.0% and 6.7% of non-steel business revenue respectively. In recent years, under the policy environment of strict control of new steel production capacity in China, the company has actively developed non-steel engineering fields such as housing construction, infrastructure, ecological environmental protection, new energy and cultural tourism while stabilizing the leading position of metallurgical engineering. Non-steel business has become the core growth engine of the company's engineering sector.

Housing construction, infrastructure: the market share of central enterprises continues to increase, and the advantages of investment and financing integration mode of housing construction business

The market share of central enterprises in construction accelerated, and orders are expected to continue to increase. In recent years, under the influence of many factors such as anti-corruption, replacing business tax with value-added tax, financial regulation, fluctuations in raw material prices, and the impact of the epidemic, industry concentration has continued to increase, and small enterprises with irregular operations and weak strength have gradually withdrawn from the industry. In 2023, Q1 construction central enterprise revenue accounted for 30% of the construction industry output value, which increased by nearly 9 PCTS compared with the end of 2022, and the market share acceleration trend is obvious. In the future, a number of factors are expected to accelerate the increase of leading market share: 1) the trend of large-scale projects, integration and financing will accelerate. In recent years, the types of projects such as integrated development of urban areas and large-scale industrial parks have grown rapidly. Such projects have large investment volume (more than 10 billion yuan) and comprehensive construction capacity (involving housing construction and infrastructure construction), which require high comprehensive capacity of contractors. At the same time, in the past 18 years, due to the upgrading of local governments' control by financing platforms, EPC+F, PPP, ABO and other investment and integration project models have emerged, putting higher requirements on the scale of enterprise funds. Central construction enterprises have the advantages of the whole industrial chain service, low financing costs, and various resources can better match the needs of local governments. 2) Central enterprises and other large enterprises gradually increase the scale of mining, industrial chain pricing power, in the background of rising raw materials and labor costs, the cost side of the scale advantage will be more clearly reflected. 3) Under the constraints of the double carbon target, the green technical standard of the construction industry will build a higher barrier, and the leader will have more advantages in technology, research and development, qualification and other aspects. From the perspective of orders, the company's non-steel orders from 2020 to 2022 increased by 34%/20%/11% respectively, maintaining a rapid growth rate, demonstrating the resilience of leading operations during the epidemic. The state has introduced relevant policies to encourage increased investment in urban infrastructure construction, and the subsequent market share of central enterprises has steadily increased, and the company's non-steel project orders are expected to continue to grow rapidly