Danieli (AO) | Buy | A number of positive drivers

研报英文原文证据摘录

Danieli (AO) | Buy | A number of positive drivers

should increase, boosting revenues, but

with a lower margin progression vs H2 2024/25.

Average contract size: it has 2x from EUR150m to EUR300m in the last five years, which has typically driven a higher profitability

thanks to scale economies.

Favourable geopolitical and environmental drivers, plus tariffs: management is identifying three key drivers for the solid

demand in plant making: 1) due to geopolitical factors, independence on steel production for each country is becoming crucial. 2)

conversion from polluting technologies (namely blast furnace) to greener ones, 3) the continuing quest for efficiency gains, which

is made available thanks to new production technologies; 4) CBAM and import tariffs and quotas.

Persian Gulf: projects which might be partially delayed by the blockage of Hurmuz are worth 5% of the current backlog. So far,

milestones in H2 have been met.

SSAB green conversion: On 11 May, Vattenfall Distribution, which is responsible for constructing the new power line, informed

that the grid connection will be delayed, impacting the start-up of production at the new electric arc furnace in Oxelösund.

However, SSAB has informed that the construction of the electric arc furnace commissioned to Danieli is proceeding according to

plan.

Metinvest / Piombino greenfield project: the project financial procedure is ongoing, and the contract, which might be worth

cEUR1.5bn for Danieli (25% of the current backlog), is expected to be awarded in the next few weeks.

Our investment view

We are valuing the stock at EUR83 based on our SOP. We like the high-tech product offer, particularly in EAF and DRI, solid

momentum on backlog, positive prospects in plant making, and the good cash conversion.

IMPORTANT.