EMEA Steel Producers: Making EVRAZ great again (Erdemir and NLMK downgraded to HOLD; EVRAZ and MMK stay BUY; Severstal stays HOLD)
After reporting their 4Q17 results, all the steels under our coverage saw strong growth in EBITDA, despite the seasonal weakness in the Russian market, as high international prices lifted export volumes and boosted margins. The seasonal working capital build up was high, limiting FCF, but dividends remained strong as many payments exceeded FCF. With prices starting the year even higher, 1Q18E should be strong and our previous 2018E price assumptions look far too conservative. We therefore increase our steel price assumptions once more, and raise our PTs by -6 to 29%. However, with high steel prices, companies are once more looking for growth, and capex spending is on the rise again. In addition to higher spending, greater protectionism in the US could have a negative impact on steel prices globally, increasing competition in the markets for Russian and Turkish exports. Despite the positive movements in steel prices in the past two years, we believe we are now close to the peak, and headwinds from President Trump’s proposed 25% tariffs on imports and higher capex have led us to take a more cautious view on the sector.
Evraz engages in the production and distribution of steel and related products and coal and iron ore mining. Co. also produces vanadium products. Co. has four segments: Steel, which includes production of steel and related products at all mills except for those in North America, and includes the extraction of vanadium ore and production of vanadium products, iron ore mining and enrichment and certain energy-generating companies; Steel, North America, which includes production of steel and related products in the U.S. and Canada; Coal, which includes coal mining and enrichment; and Other operations, which includes energy-generating companies, shipping and railway transportation companies.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.