BlueScope Steel (BSL) Share Trading Recommendation

Submitted by Craig Strzelecki on 27 February, 2007 - 06:23

BlueScope Steel (BSL) have a downgraded share recommendation of Sell / High Risk and a raised share price target of $7.85 (from $7.60) from analyst Citigroup Investment Research (CIR). BlueScope delivered a strong result with NPAT of $388m, 9% ahead of expectations. Buoyant steel market conditions support the near-term outlook, but the analyst retains their outlook for weaker prices over the next 18 months. Strong performances out of Hot Rolled Products and Butler North America were the highlights. Higher-than-expected prices were realised for both domestic and exported upstream products. The Asian businesses contributed a combined EBIT of just $1m (excluding the $30m from Thailand). They expect significant writedowns in this division (perhaps when a new CEO is appointed), as they find it difficult to see how a 20% return can be earned on the >$1.2bn of investment. BlueScope indicated it remains open to supporting a restructured OneSteel / Smorgon Steel merger scheme, but didn’t offer any clarity on its “win-win-win” scenario. CIR have increased our earnings forecasts by 13% for F07, driven by a stronger-than-expected 1H result and a slight increase to our HRC price forecast. Our F08e and F09e earnings have increased by 5% and 7%, respectively.

BlueScope Steel Limited is listed on the Australian Stock Exchange (ASX) under stock code BSL. You can view their investor website here. Find out the meaning of the recommendations in this primer. BSL was listed on the ASX on 15 July, 2002. Graham Kraehe is the chairman of BlueScope Steel and the Managing Director is Kirby Adams. BlueScope Steel is the leading steel company in Australia and New Zealand, supplying a large percentage of all flat steel products sold in these markets. They specialise in the production of flat steel products, including slab, hot rolled coil, cold rolled coil, plate, tin plate and value-added metallic coated and painted steel products. Our steelworks at Port Kembla in New South Wales is the largest steel production facility in Australia and one of the world's lowest-cost producers of steel products. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade BSL. Check your charts and good luck with your share trading!

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