BlueScope: Neutral: SOTP valuation reflects balanced risk-reward; fair value

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BlueScope: Neutral: SOTP valuation reflects balanced risk-reward; fair value

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BlueScope

Neutral: SOTP valuation reflects balanced

risk-reward; fair value

Rating Change: NEUTRAL | PO: 33.40 AUD | Price: 30.96 AUD

Rating changed to Neutral from No Rating; PO A$33.40/sh 11 May 2026

We change our BSL rating to Neutral after having the stock on No Rating since 6 Jan Equity

during the takeover approach. Following BSL’s rejection of the SGH & STLD consortium

proposal, the stock has reverted to trading on fundamentals, supported by improved

Key Changesearnings outlook and an expanded capital return program since Feb-26. We have updated

our valuation to a SOTP approach to better reflect the values and contribution of its US (A$) Previous Current

business, which was underappreciated under our prior group valuation. We apply an Inv. Opinion -6- B-2-7

EV/EBITDA (CY26&27 AVG) multiple of 8.0x to the US division and 5.0x to the APAC Inv. Rating NO RATING NEUTRAL

business, deriving a PO of A$33.40/sh (See Exhibit 2). While BSL is not a pure US Price Obj. NA 33.40

exposure, the 8.0x represents a 20% discount to US peers NUE & STLD (see Exhibit 1), 2026E EPS 1.90 2.06

while the 5.0x for ex-US is in line with regional steel peers. Our PO implies a total 2027E EPS 1.99 2.14

potential return of 14% including a 4.3% DY. 2026E EBITDA (m) 1,940.6 2,024.6

2027E EBITDA (m) 2,017.9 2,104.0

2028E EBITDA (m) 2,379.0 2,371.9Improved earnings outlook on increasing steel prices

We lift our FY26e-FY27e EBITDA by 4.0% (average), primarily driven by higher US steel

prices. Our US steel analyst has increased HRC price by 3-18% over CY26-CY28 (refer to Chen Jiang >>

Research Analyst

Price update). US business contributes to 56% of BSL’s FY27e group EBITDA (BofAe).