Northern Lights

SSAB (Buy, TP: SEK56.00) - Set for a strong Q2

The Q1 results were burdened by production and logistics issues in Special Steels and Europe, and the margin between realised prices and scrap cost was slightly weaker in Americas. Excluding one-offs, Special Steels profitability was above our forecast and consensus. The full effect of higher US prices should be visible in the P&L in mid-Q2 onwards. We continue to see strong momentum for SSAB and reiterate our BUY with a slightly higher target price of SEK56 (53).

Northern Lights

SSAB (Buy, TP: SEK53.00) - US price hikes not yet visible

US trade policy has dominated discussions in 2018 – we expect the tariffs to have a small net positive effect on the group but we do not expect the full effect of higher US prices to be visible in the Q1 results. We are 3% below consensus Q1e EBITDA (results due at 07:30 CET on 20 April). We reiterate our BUY and believe consensus is undervaluing Special Steels 2018e earnings, but we have trimmed our target price to SEK53 (56).

Northern Lights

Time for Special Steels to shine

We believe SSAB’s growing share of niche steel deliveries combined with improved pricing discipline in Europe’s steel industry will support 2018–2019 earnings. We expect a clear pick-up for the Special Steels division in 2018, as production stoppages have meant SSAB has not benefited from improved end-user demand YTD. Our EBITDA estimates are above consensus by 9% for 2018 and 1% for 2019. We initiate coverage with a BUY recommendation and SEK47 target price.