BlueScope Steel "Resuming coverage. Looking beyond the bid." (Buy) Wilson

研报英文原文证据摘录

BlueScope Steel "Resuming coverage. Looking beyond the bid." (Buy) Wilson

the need for 24/7 utilisation) and tariffs have effectively lifted the floor of the

From To % ch Cons.

pricing cycle. The result is a market structure that remains asymmetric to the upside. We 06/26E 1.75 1.94 11 1.92

also note that key short-term pricing indicators (high lead times and low service centre 06/27E 2.14 2.68 25 2.26

inventories), continue to suggest upside risk. While medium-term demand indicators 06/28E 2.34 2.34 0 2.46

such as the ABI, manf. PMIs and auto production have all improved slightly from cyclical

lows, supporting a favourable risk-reward outlook. Will Wilson

Analyst

will-za.wilson@ubs.com

What post peak capex mean for shareholders

+61-2-9324 3848

BlueScope has materially revised its financial framework, increasing its target

Nathan Reillydistribution to shareholders to at least 75% of free cash flow (prior 50%) and lifting its

balance sheet capacity to a net debt target of up to A$1.5bn (prior A$400-800m). With nathan.reilly@ubs.com

the company's peaking in FY26, we expect free cash flow generation to inflect +61-2-9324 3156

materially from FY27. As a result, we see scope for a sustained step-up in shareholder

Nara Gong

returns, with buy-backs likely to become an increasingly important component of capital

Associate Analyst

management. nara.gong@ubs.com

+61-2-9324 2908

Valuation: 12m price target A$37.50/sh (was A$27.50/sh). Buy.

Our 50:50 EV/EBIT:DCF price target increases by 36% to A$37.50/sh, driven by higher

FY26/FY27 EPS forecasts (+11%/+25%) on stronger US spread assumptions and an

increase of our target EV/EBIT multiple to 10x (from 9x). The revised multiple reflects a

~10% discount to key peers, whose average valuation has re-rated from 10x to 11x.