JSW: Strategy presentation – little new news (stays HOLD)
JSW presented its new 2018-30E strategy update on Friday (9 February). Most of the headline numbers had been presented in a December press release already, so the production figures were broadly in line with our estimates, and the total 2018-30E capex of c.PLN 19bn was reiterated. Cost guidance was higher than we expected and the previous guidance. In this report, we also increase our coal price assumptions and assume a stronger zloty, which results in a small (2%) increase in our price target (PT) to PLN 101/share, and we reiterate our HOLD recommendation. On the positive side, JSW’s management said it could pay up to 30% of the net income as a dividend, subject to discussions with the unions, which is in line with our model. This implies 4-6% dividend yields in 2017/18E, but only 2-3% thereafter, on our estimates. As a result, we see better value in our steel coverage, where we expect dividend yields in the high single digits, despite our conservative price assumptions.
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.
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