Pakistan Long Steel Conference - Robust growth to continue!, (AKD Daily, May 28, 2021)
AKD Daily
Pakistan Long Steel Conference — Robust growth to continue!
- AKD Securities Ltd. organized Pakistan Long Steel Conference (PLSC) where leading listed long steel players namely Amreli Steels Ltd. (ASTL), Mughal Iron & Steel Industries (MUGHAL), Agha Steel Industries Ltd. (AGHA) and Ittefaq Iron Industries Limited (ITTEFAQ) shed light on the future outlook of the sector.
- Industry players expect the overall demand growth to be in the range of 6-10% for FY22 backed by strong construction sector package coupled with contribution from increased urbanization. Industry players expect Naya Pakistan Housing Scheme to generate 4-5mn tons of demand over next 2-3 years (given the project reaches 50% of its completion)
- Commenting on the pricing dynamics, FY21 price differential between imported scrap and local rebar prices is at its 5yr low of US$260-290/ton vs. historical average of US$360-380/ton. Hence, there is still room for rebar prices to go up by at least PkR5-8K/ton (currently at 142-143K/ton), given scrap prices sustain at current levels of ~US$500/tons
- We maintain our overweight stance on the sector as economic rebound is expected to induce demand where additional impetus is expected to be provided by continuous government support in the shape of various incentives to construction sector. We have a Buy stance on ASTL with our TP of PkR61/sh providing an upside of 48.8%.
AKD Research
Mughal Iron & Steel Industries Ltd. Mughal Iron & Steel Industries Limited is engaged in manufacturing and trading of mild steel products. The Company is engaged in producing steel in the long-rolled steel products, which has a capacity of 688,000 metric/tons of re-rolled steel per annum. The Company is engaged in multidimensional activities from making billets of mild steel, spring steel, deformed bar, re-bar, cold twisted rebar and a range of sections, such as I-beams, L-sections, C-section, H-beams and T-bar. The Company offers its products under various categories, including Smelting, such as Ferro Silicomanganese, Ferro Chrome and Ferro Silicon; Billet, such as Mild Carbon Billets, Spring Steels, Austentic Stainless Steel, Ferrite Stainless steels and Alloys Steels; Bars, including Deformed Bars, Re-inforcement Bars and Thermax Bars; Beams, including I Beams (Girders), Angle Section (L Section), T Bar (T section) and C Channel, and Grade and Specifications, including ASTM A 615 G-40 and ASTM A 321.
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