Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JSW Steel
1Q operating results stronger
than expected
1Q operating results ahead, but PAT in line, Maintain Buy
Standalone PAT was in line at Rs5.8bn (-31%QoQ). EBITDA (-20%QoQ) was
10% ahead as ASP surprised positively led by favorable mix. This was offset by
higher interest costs (+29%QoQ) resulting in inline PAT. 3.2mtpa capacity has
been started. Chile iron ore mines added US$11.5mn (US59/t) to Grp. EBITDA in
1Q. We expect JSW to face margin pressure near term due to higher coking coal
costs. However we remain positive medium term as we expect 22% volume
CAGR over FY11-13e to drive 32% EPS CAGR over FY11-13e.
EBITDA surprise on stronger realizations and higher vols.
Consol PAT declined 39%QoQ to Rs4.8bn.Vols. declined 1%QoQ to 1.71mt (4%
ahead) incl. Ispat transfers (0.15mt ). EBITDA/t was US$180/t (-US$21/t QoQ).
ASP grew 1.6%QoQ (2% ahead). This may be partially due to higher long
products vols. (+7%QoQ) & lower flat product vols. (-7%QoQ) as avg. long
product prices increased QoQ while flat product prices declined QoQ. Avg. costs
were up +US$36/t QoQ due to partial impact of higher coking coal costs. US
plates & pipes subs. EBITDA declined 20%QoQ to US$3.7mn.
Full impact of coking coal price hikes to come thru in 2Q
Cost savings from beneficiation, higher sinter mix (instead of lumps) may cushion
the impact partially. Bellary (Karnataka) iron ore mine closures due to ongoing
survey against illegal mining have disrupted ore supply. JSW does not see major
issue at this stage as it has secured supplies from adjacent Chitradurga area.
3.2mtpa capacity kicks in; Chile iron ore shipments start
JSW expects steel sales of 9mt (+48%YoY, BoFAMLe 8.3mt) in FY12 (incl.
0.75mt Ispat transfers). JSW expects Chile iron ore vols. of 1mt in FY12e (FoB
cost US$60/t). It has got DEP permit for commencing mining at its US coking coal
mines. It expects coking coal volumes of 0.35mt in FY12e.
Other Key takeaways
ASP increase mainly led by favorable mix: June Q ASP was up 1.6%
despite lower flat production prices as JSW sold higher volumes of long
products ( +7%QoQ) and lower volumes of flat products ( -7%QoQ). We note
that long product price hikes in March Q lagged flat product prices in March
Q. Hence average long product prices increased QoQ while flat product
prices declined QoQ. In addition value added product mix (as a % of flat
products) also increased during the quarter.
Costs have increased 3%QoQ: Avg. costs were up +US$36/t QoQ due to
partial impact of higher coking coal costs. In addition power cost/t also
increased 33% led by higher thermal coal costs and consumption of power
by the newly commissioned auxiliary units.
Volume guidance of 9mn tons in FY12e. JSW Steel continues to guide to
steel production of 8.5mn tons and steel sales of 9mn tons. This includes ~
0.7mn tons transferred from Ispat for re rolling. We currently forecast steel
volumes of 8.35mn tons in FY12. Our forecast does not include rerolling
transfers.
Shipments from Chile mine start in June Q: JSW delivered 0.19mt of iron
ore from Chile mines in June Q. EBITDA was US$11.5mn (US59/t). JSW
expects 1mn tons of shipments in FY12 from Chile mines. Our current
forecasts assume 1mn ton of production from Chile mine in FY12.
US coking coal mine has received DEP permit: JSW Steel’s US coking
coal mines have received statutory DEP (Deptt of Environment Protection)
for mining. It expects to deliver 0.35mn ton of coking coal to JSW in FY12.
According to JSW proposed cost savings should be US$80/t.
Net Debt: JSW Consol net debt (including suppliers credit) was US$4mn and
net debt to equity was ~1x as on June Q.
Price objective basis & risk
JSW Steel (XJWJF)
Our PO of Rs1,020 is based on our NPV estimate. This assumes a WACC of
12.5% and a perpetuity growth of 0%. At our PO, JSW would trade at 6.6x FY12e
EBITDA (6x EBITDA adjusting for CWIP) and 12x FY12e EPS. Our model
assumes volumes of 8,35mt in FY12e and 9.15mt in FY13e. Our domestic HRC
assumptions are Rs33419 in FY12e and Rs31476 in FY13e.
Downside risks to our PO are lower-than-expected steel prices and volumes, and
higher input costs. Upside risks are higher-than-expected steel prices and
volumes, and lower input costs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JSW Steel
1Q operating results stronger
than expected
1Q operating results ahead, but PAT in line, Maintain Buy
Standalone PAT was in line at Rs5.8bn (-31%QoQ). EBITDA (-20%QoQ) was
10% ahead as ASP surprised positively led by favorable mix. This was offset by
higher interest costs (+29%QoQ) resulting in inline PAT. 3.2mtpa capacity has
been started. Chile iron ore mines added US$11.5mn (US59/t) to Grp. EBITDA in
1Q. We expect JSW to face margin pressure near term due to higher coking coal
costs. However we remain positive medium term as we expect 22% volume
CAGR over FY11-13e to drive 32% EPS CAGR over FY11-13e.
EBITDA surprise on stronger realizations and higher vols.
Consol PAT declined 39%QoQ to Rs4.8bn.Vols. declined 1%QoQ to 1.71mt (4%
ahead) incl. Ispat transfers (0.15mt ). EBITDA/t was US$180/t (-US$21/t QoQ).
ASP grew 1.6%QoQ (2% ahead). This may be partially due to higher long
products vols. (+7%QoQ) & lower flat product vols. (-7%QoQ) as avg. long
product prices increased QoQ while flat product prices declined QoQ. Avg. costs
were up +US$36/t QoQ due to partial impact of higher coking coal costs. US
plates & pipes subs. EBITDA declined 20%QoQ to US$3.7mn.
Full impact of coking coal price hikes to come thru in 2Q
Cost savings from beneficiation, higher sinter mix (instead of lumps) may cushion
the impact partially. Bellary (Karnataka) iron ore mine closures due to ongoing
survey against illegal mining have disrupted ore supply. JSW does not see major
issue at this stage as it has secured supplies from adjacent Chitradurga area.
3.2mtpa capacity kicks in; Chile iron ore shipments start
JSW expects steel sales of 9mt (+48%YoY, BoFAMLe 8.3mt) in FY12 (incl.
0.75mt Ispat transfers). JSW expects Chile iron ore vols. of 1mt in FY12e (FoB
cost US$60/t). It has got DEP permit for commencing mining at its US coking coal
mines. It expects coking coal volumes of 0.35mt in FY12e.
Other Key takeaways
ASP increase mainly led by favorable mix: June Q ASP was up 1.6%
despite lower flat production prices as JSW sold higher volumes of long
products ( +7%QoQ) and lower volumes of flat products ( -7%QoQ). We note
that long product price hikes in March Q lagged flat product prices in March
Q. Hence average long product prices increased QoQ while flat product
prices declined QoQ. In addition value added product mix (as a % of flat
products) also increased during the quarter.
Costs have increased 3%QoQ: Avg. costs were up +US$36/t QoQ due to
partial impact of higher coking coal costs. In addition power cost/t also
increased 33% led by higher thermal coal costs and consumption of power
by the newly commissioned auxiliary units.
Volume guidance of 9mn tons in FY12e. JSW Steel continues to guide to
steel production of 8.5mn tons and steel sales of 9mn tons. This includes ~
0.7mn tons transferred from Ispat for re rolling. We currently forecast steel
volumes of 8.35mn tons in FY12. Our forecast does not include rerolling
transfers.
Shipments from Chile mine start in June Q: JSW delivered 0.19mt of iron
ore from Chile mines in June Q. EBITDA was US$11.5mn (US59/t). JSW
expects 1mn tons of shipments in FY12 from Chile mines. Our current
forecasts assume 1mn ton of production from Chile mine in FY12.
US coking coal mine has received DEP permit: JSW Steel’s US coking
coal mines have received statutory DEP (Deptt of Environment Protection)
for mining. It expects to deliver 0.35mn ton of coking coal to JSW in FY12.
According to JSW proposed cost savings should be US$80/t.
Net Debt: JSW Consol net debt (including suppliers credit) was US$4mn and
net debt to equity was ~1x as on June Q.
Price objective basis & risk
JSW Steel (XJWJF)
Our PO of Rs1,020 is based on our NPV estimate. This assumes a WACC of
12.5% and a perpetuity growth of 0%. At our PO, JSW would trade at 6.6x FY12e
EBITDA (6x EBITDA adjusting for CWIP) and 12x FY12e EPS. Our model
assumes volumes of 8,35mt in FY12e and 9.15mt in FY13e. Our domestic HRC
assumptions are Rs33419 in FY12e and Rs31476 in FY13e.
Downside risks to our PO are lower-than-expected steel prices and volumes, and
higher input costs. Upside risks are higher-than-expected steel prices and
volumes, and lower input costs.
No comments:
Post a Comment