Topline Flash Note: International Steels Limited (ISL): Analyst Briefing Takeaways
- Flat steel industry’s volumes declined by 24% YoY to 950k tons in FY20, wherein 495k tons market is attributed to coated steel (galvanized and color coated). Two wheelers and three wheelers contribute around 100k tons to the market. Sales volumes of ISL fell by 20% YoY to 418k tons in FY20.
- CRC product applications are in sectors like (1) Automotive, (2) Pipes, (3) Drums, (4) Electric/Home Appliances, (5) Telecom, (6) Construction and (7) agriculture, amongst others.
- Major customers of the company are (1) Yamaha, (2) Atlas Honda, (3) Pak Elektron, (4) Dawlance, and (5) Loads Limited, amongst others.
- Anti-Dumping duties on CRC are set to expire in Jan-2021, however industry is planning to file a sunset review to extend this tenure.
- Currently duties applicable on HRC are 5%, while duties on finished product are ~12% (RD/CD/ACD).
- China became a net importer of steel for the first time in 11 years due to fiscal stimulus provided by their government. This has provided some stability to declining steel prices.
- Going forward, outlook remains uncertain as Chinese spending will slowdown and other major consuming countries like India are still facing difficulties due to COVID-19.
- Company imports majority of its raw material from Japan, followed by Taiwan and Turkey.
- As per the management, Siddiqsons has dropped planned to install a rolling mill, while Hadeed is currently operational.
- The company has started a service center on 15 Acres of land at Port Qasim to provide ‘cut to length’ facility to consumers.
HRC project is under evaluation (that may cost up to US$350mn), as for last the four years, the management has been trying to approach the government for commitment of imposition of reasonable duties.
International Steels Limited is a producer of flat steel products. The Company manufactures cold rolled steel coils, galvanized coils and color coated steel. Its cold rolled steel is available in thicknesses ranging from 0.25 millimeter (mm) to 3.0 mm; galvanized steel is available in thicknesses of 0.25 mm to 2.0 mm, and color coated steel is available in thickness range of 0.20 to 1.50 mm. Its rolling capacity is 500,000 metric tons (MT). It produces approximately 400,000 MT of galvanized products. It produces color coated sheets on various substrates, including cold rolled, galvanized, galvalume, aluminum and stainless steel sheets. Its cold rolled steel offers applications, such as ceiling lights, tube lights, ceiling fans, oil drums, lube drums and motor cycle frame; galvanized steel has applications, such as packaging, furniture, washing machines, gas ovens and microwave ovens, and color coated steel offers applications, such as ice boxes, tubs, buckets and storage bins.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
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