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Offline MZ

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Steel Sector
« Reply #-1 on: August 09, 2017, 09:24:12 PM »
All about steel sector.

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Steel Sector
« Reply #-1 on: August 09, 2017, 09:24:12 PM »

Offline MZ

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Re: Steel Sector
« on: August 09, 2017, 09:24:38 PM »
Industry Report (Detailed)

Pakistan Flat Steel Sector

Booming on Spending Revolution
·         We initiate coverage on Pakistan Flat Steels with an Overweight stance. Flat steel manufacturers are expected to do particularly well with expansions planned to cater booming domestic demand arising from robust growth outlook for downstream sectors including autos, electronics and construction.

·         Anti-dumping duties levied on Chinese flat steel imports have turned the tables in favor of domestic manufacturers, providing a sigh of relief against the threat of cheaper dumped imports.

·         We expect Flat Steel Stocks to offer an average upside of ~38% backed by robust earnings growth (3-year / 5-year forward CAGR of 34% / 24%).

·         With our Jun-18 PT’s of PKR178/share for ISL and PKR30/share for ASL, the stocks offer total return of 38% and 36%, respectively.

Demand Boom Likely to Sustain Momentum: Domestic demand for flat steel products has been growing at a robust pace (>10% p.a.) led by strong growth witnessed in downstream sectors including autos, electronics and construction. These sectors have seen particular surge in demand led by rising real income, increase in consumerism and ever-growing government spending to address infrastructure shortfall. As such, Pakistan’s crude steel consumption per capita remains relatively low at 37.5kg compared with global average of 224.4kg, with impressive growth rate (3-year historical CAGR of 21%) in recent years expected to sustain at least in the medium term. As such, we expect future flat steel demand to grow at a rate of 10% p.a.

Local Expansions to Replace Imports’ Market Share: In the backdrop of booming domestic demand and significant gap present in domestic demand/production, flat steel manufacturers have announced expansions in both CRC (450k tpa / 480k tpa by ISL / ASL) and GC (250k tpa by ASL) to expand their market share. In this regard, we expect CRC / GC market share to increase from 51% / 48% in FY16 to 73% / 79% by FY20 when the planned expansions start commercial operations.

Anti-Dumping Duties to Provide Meaningful Protection: The flat steel manufacturers are expected to significantly benefit from recently imposed anti-dumping duties levied on Chinese flat steel products. In this regard, Competition Commission of Pakistan (CCP) has imposed anti-dumping duties of 13.17%-19.04% and 6.09%-40.47% on imports of CRC and GC from China/Ukraine, respectively. As a result, realized spreads of CRC-HRC / GC- HRC jumped from USD92 / USD176 per ton in FY16 to estimated USD163 / USD211 per ton in FY17. Going forward, we expect realized CRC-HRC / GC-HRC spreads to stay firm at USD150 / USD230 per ton owing to increased cost of CRC and GC imports post the levy of anti-dumping duties. In this backdrop, flat steel manufacturers would be relatively resilient to falling international prices of CRC and GC whereas any decline in global HRC prices will help local manufacturers realize higher primary margins.

Valuation: Driven by a strong pickup in private consumption, flat steel stocks have rallied 223% since Jun-16, however they still remain undervalued in our view. We opine that relatively premium PE multiples of 12.9x / 9.1x for FY18F / FY19F are justified on the back of 1) expectation of 3-year / 5-year forward earnings CAGR of 34% / 24%, and 2) anticipated stability of spreads owing to protection provided by anti-dumping duties. Our Jun-18 PT’s of PKR178/share for ISL and PKR30/share for ASL imply a total return of 38% and 36%, respectively.

Offline onlybulls

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Re: Steel Sector
« Reply #1 on: August 09, 2017, 10:24:03 PM »
Is report me asl tp k sath kanjosi se kam lia gya ha. Pkr 30 is nothing.

Offline Stock_Cheeta

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Re: Steel Sector
« Reply #2 on: August 09, 2017, 10:39:36 PM »
Is report me asl tp k sath kanjosi se kam lia gya ha. Pkr 30 is nothing.
Ap kis behalf p bol rahe hn ASL 30 is nothing?

Offline onlybulls

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Re: Steel Sector
« Reply #3 on: August 09, 2017, 11:21:16 PM »
Is report me asl tp k sath kanjosi se kam lia gya ha. Pkr 30 is nothing.
Ap kis behalf p bol rahe hn ASL 30 is nothing?
Expansion kay behalf pe.
Koi shak  ;) .

Offline SlowTyperr

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Re: Steel Sector
« Reply #4 on: August 09, 2017, 11:50:09 PM »
In 10 months ASL will grow only by Rs. 9 per share?

Offline myfahim

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Re: Steel Sector
« Reply #5 on: August 10, 2017, 10:35:35 AM »
In 10 months ASL will grow only by Rs. 9 per share?

more than 40%

Offline Farzooq

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Re: Steel Sector
« Reply #6 on: October 23, 2017, 10:06:50 AM »
19% anti dumping duty on steel bars
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Offline Irfy

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Re: Steel Sector
« Reply #7 on: October 23, 2017, 10:25:12 AM »
Where INIL stands in this scenario?

Offline Farzooq

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Re: Steel Sector
« Reply #8 on: October 23, 2017, 10:33:45 AM »
Anti-dumping Duty of 19.15% Levied on Chinese Imported Re-bars
 
·         National Tariff Commission (NTC) announced final determination of 19.15% anti-dumping duty on imports originating from China for a period of 5 years effective from 23rd October, 2017 after it concluded material injury caused to domestic industry by dumped Chinese re-bars imports.

·         Note that this duty is over and above existing 30% regulatory duty in place. Based on latest Chinese re-bars prices of USD590/ton, the landed prices come out to ~PKR122,500/PKR110,000 with/without anti-dumpng duty.

·         We do not expect local re-bars prices (PKR87,000/ton) to jump immediately in the wake of this decision as the domestic manufacturers focus on maintaining target margins and remain competitive.

·         However, this is positive for local industry as it reduces the risk of heightened re-bars imports seen in 2016. Besides, local manufacturers would be much more comfortable in passing on rising raw material costs.

·         The key beneficiaries from listed space are Amreli Steel (ASTL), Mughal Iron and Steel (MUGHAL), Ittefaq Iron Industries (ITTEFAQ) and Dost Steels Limited (DSL).

·         Our top pick amongst these is ASTL (Jun-18 TP: PKR156) for which we have assumed gross margins of 17.6%/19.5% for FY18E/FY19E. The latest imposition of duty poses upside risk to our estimates, however we await actual increase in domestic retail prices before changing our assumptions.

Elixir
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Offline Farzooq

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Re: Steel Sector
« Reply #9 on: December 20, 2017, 08:19:09 PM »
World Steel Association says #Pakistan’s Monthly #Steel (Billets/Ingots) production for #November was 460K (e) Tonnes.
#Pakistan #industrialgrowth
#worldsteel
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Offline usmangfatm

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Re: Steel Sector
« Reply #10 on: December 21, 2017, 12:18:57 AM »
World Steel Association says #Pakistan’s Monthly #Steel (Billets/Ingots) production for #November was 460K (e) Tonnes.
#Pakistan #industrialgrowth
#worldsteel
Is this production very high in Nov ? What is the percentage increase from last year ?

Offline Umair.shaf

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Re: Steel Sector
« Reply #11 on: December 21, 2017, 02:03:15 PM »
China’s crude steel production cuts drive global slowdown in November
The anticipated Chinese production downturn weighed on global crude steel output growth, which decelerated to 3.7% year on year in November, the World Steel Association (Worldsteel) said on Wednesday December 20.

Crude steel output for the 66 countries reporting to Worldsteel was 136.28 million tonnes in November, up from 131.46 million tonnes the same month in 2016. But that 3.7% year-on-year growth rate was down significantly from respective gains of 5.9% and 5.6% in October and September. November’s global crude steel production also fell from October’s 145.25 million tonnes, which was a monthly record.

Offline MH

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Re: Steel Sector
« Reply #12 on: December 21, 2017, 02:11:01 PM »
What actually it indicates for the local market?

Offline Umair.shaf

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Re: Steel Sector
« Reply #13 on: December 21, 2017, 02:17:32 PM »
Steel sector Cap...

Offline MH

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Re: Steel Sector
« Reply #14 on: December 21, 2017, 02:52:53 PM »
World Steel Association says #Pakistan’s Monthly #Steel (Billets/Ingots) production for #November was 460K (e) Tonnes.
#Pakistan #industrialgrowth
#worldsteel
Is this production very high in Nov ? What is the percentage increase from last year ?


37% YoY increase. 43% increase on YTD basis.

Offline Aahaf

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Re: Steel Sector
« Reply #15 on: December 23, 2017, 12:33:23 AM »
China reduce steel export tariff, new tariff apply from Jan'18 news negative for local producers world over seniors?

Online ali-ahmad

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Re: Steel Sector
« Reply #16 on: December 23, 2017, 12:45:41 AM »
Bahi local producers ke liye negative kiun hai

Offline Farzooq

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Re: Steel Sector
« Reply #17 on: April 02, 2018, 09:03:00 PM »
Fastest Growing Yet Most Undervalued on PEG

·         Pakistan Steel Sector is expected to post impressive earnings growth driven by volumetric growth, stability in realized spreads and improving cost efficiencies. With regards to the earlier, we estimate Elixir Steel Universe’s estimated 3-year (FY17-20) earnings CAGR at 44%, highest in Elixir Universe (average: 13%).

·         We believe that valuations have overplayed risks to pricing and market share as the sector has passed on rising raw material costs (domestic prices are still at a significant discount to landed price of imports) and competitors’ expansions have been delayed.

·         In this regard, we believe Elixir Steel Universe remains the most undervalued sector as its 3-year PEG (FY19F) ratio stands at 0.2x, lowest in Elixir Universe (average: 0.8x).

·         At current levels, ASTL is our top pick in Elixir Steel Universe with Dec-18 PT of PKR153/share as it is expected to post fastest earnings growth and has the lowest 3-year PEG (FY19F) ratio of 0.12x.

Earnings to be Driven by Expansion: Steel sector has remained one of the fastest growing sectors in recent times (LSM steel production growth: 34%YoY/20%YoY in 7MFY18/FY17) where we foresee similar trend to continue in upcoming years (Elixir Steel Universe’s dispatches growth: 45%YoY/20%YoY in FY19F/FY20F; 3-year FY17-20 dispatches CAGR of 25%) as new expansions start rolling out. In this regards, we expect Amreli Steel’s (ASTL) 425ktpa re-rolling expansion to start commercial production from Apr-18, International Steel’s (ISL) 450ktpa Cold Rolling Capacity from Jun-18 and Aisha Steel’s (ASL) 480ktpa/250ktpa Cold Rolling/Galvanizing Capacities by Dec-18/Jun-19. Individually, ASTL/ISL/ASL 3-year (FY17-20) dispatches CAGR’s are expected to stand at 40%/19%/23%. Besides that, volumetric growth is expected to be further supported by double digit domestic demand growth with growing consumerism/construction activity and falling market share of imports due to imposition of anti-dumping duties. Earnings are anticipated to be less volatile owing to expected stability in realized spreads backed by pricing power acquired through imposition of anti-dumping duties on steel products imports. The operational savings attributable to new technology based expansions are likely to further improve margins and earnings. In this regard, we estimate Elixir Steel Universe’s estimated 3-year (FY17-20) earnings CAGR to stand at 44%, highest in Elixir Universe (average: 13%) where ASTL/ISL/ASL’s are expected to grow by 65%/35%/45%.

Undervalued With Risks Overplayed: The primary concerns persisting with regards to the risk to Steel Sector Earnings have been: 1) number of planned expansions in long steel (re-rolling/melting) segment potentially leading to price war, and 2) compression of local spreads owing to decline in import prices. However, we believe that valuations have overplayed risks as the sector has passed on 1) rising raw material costs (with final prices still at a significant discount to landed price of imports) and 2) competing local companies’ expansions have been delayed.

Valuations: We believe risks are exaggerated compared with the earnings growth potential. In this regard we estimate Elixir Steel Universe to be the most undervalued sector with 3-year PEG (FY19F) ratio of 0.2x, lowest in Elixir Universe (average: 0.8x). Within the Steel Space, our top pick is ASTL with Dec-18 PT of PKR153/share as it is expected to post fastest earnings growth and has the lowest 3-year PEG (FY19F) ratio of 0.12x.

Elixir
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Offline Farzooq

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Re: Steel Sector
« Reply #18 on: April 05, 2018, 12:03:30 PM »
RD on steel to be abolished: second phase of FTA with China deferred, says minister| (BR) Negative: Federal Minister for Commerce and Textile Muhammad Pervez Malik has said that regulatory duty on steel will be abolished while government has deferred second phase of Free Trade Agreements (FTAs) with China on demand of the Lahore Chamber of Commerce & Industry. While talking to the Lahore Chamber of Commerce and Industry (LCCI) President Malik Tahir Javaid, in a meeting on Wednesday, federal minister said that concrete measures are being taken to boost the country's exports.

https://fp.brecorder.com/2018/04/20180405357844/
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