voestalpine confirmed at HOLD, TP EUR 38.5 - Model update: higher estimates, raising TP to EUR 38.5
Preconditions both in terms of commodity prices and demand fundamentals in the bulk of the groups end-markets appear in place for FY 21/22 to (almost) match record earnings of FY 17/18However, we think that the exceptional steel price rally and the scope for peak make the groups earnings profile toppish. Beyond the current year we expect that voestalpine will return to a post-tax ROCE shy of its cost of capital
We expect the deleveraging to continue in the current year and have modelled FCF of some EUR 330 mn.
Our target price increases to EUR 38.5 from EUR 32.5 and we affirm the HOLD rating
voestalpine is engaged in the production, processing, and distribution of materials made of steel and in research and development in the areas of metallurgy, metal processing, and materials technology. Co.'s steel division focuses on the production and processing of flat steel products. Co.'s special steel division is involve in tool steel and high-speed steel. Co.'s metal engineering division is engaged in turnout technology, rails and treated wire, and tubes. Co.'s metal forming division is involve in tube products and precision strip steel as well as pre-finished system components. Co.'s other activities include heavy plate production, a foundry, and a number of downstream processes.
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