Anti-dumping duty to further ease competition
Incorporating recent regulatory changes in the steel sector and slower than expected progress on the new rolling mill (3months delay in commencement of operations), we revisit our investment case on ASTL revising down our TP to PkR129/sh. With regards to the former, National Tariff Commission (NTC) has finally imposed anti-dumping duty (ADD) of 19.15% on imports of re-bars from China, extending further protection to the domestic long steel industry. To note, this ADD is in addition to the already-in-place regulatory duty of 30% on the imported re-bars, amplifying pricing power of the local manufacturers. As a result, pricing spread between imported and locally manufactured re-bars has expanded to ~PkR25-30k/ton (vs. previously ~PkR15-18k/ton). Moreover, the GoP has also levied regulatory duty on the import of certain items including 5% regulatory duty on import of scrap steel (previously at 1%) in a bid to contain the widening trade deficit. While resulting in an incremental cost impact of PkR350-400/ton for ASTL, we expect the company will be able to pass it on completely given strong pricing power.
Amreli Steels Limited is a Pakistan-based steel manufacturing company. The Company is engaged in the manufacture and sale of steel bars and billets. The Company offers a range of steel bars for all construction needs.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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