Pakistan Steel_ Metal prices dip as the energy crunch intensifies , (AKD Daily, Oct 11, 2021)
AKD Daily
Pakistan Steel_ Metal prices dip as the energy crunch intensifies,
- International scrap/copper prices have decreased by 3.5%/1%MoM in Sep’21 to currently hover around US$483/9289/ton compared to last 3 months avg. of US$493/9407/ton as global demand relaxes with economic activity halting on the back of enormous shortage of electricity in world’s leading manufacturing nations amid floods, other weather disruptions and Evergrande fallout
- Furthermore, partial closure of steel and metal manufacturing facilities are on the cards with looming power/energy shortage (in EU and China) could force countries to shut down or cut production of energy intensive industries. We have incorporated average scrap prices of US$435/375/ton for FY22/23 against US$360/ton average for FY21 and copper prices of US$9000/8700/ton for FY22/23 against US$7500/ton average for FY21.
- Local rebar prices have remained flat in the month of Sep’21 to stand at 179-180K/tons, following 14%MoM increase in Aug’21.
- In light of economic uncertainty and geopolitical tension, the Steel sector has underperformed (CYTD: -6.1%, FYTD: -11.9%) compared to KSE– 100 benchmark (CYTD: +1.6%, FYTD: -6.1%), however, we expect earnings to remain robust in the near term.
- Our preferred play is ASTL (TP: PkR64/sh, 70% upside) and MUGHAL (TP: PkR179/sh, 83% upside) with stocks currently trading at FY22 P/E of 6.24x/4.38x while on PEG basis, ASTL and MUGHAL is trading at 0.33x/0.16x.
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.
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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