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Baosteel: expected differentiation of mainstream steel mills in traditional peak season

http://www.sina.com.cn    17:08, October 11, 2012    Panoramic network

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   Changjiang Securities Liu Yuanrui

Event description:

   Baosteel The ex factory price policy of main products in November 2012 was announced, and the adjustment details of main varieties are as follows:

1. Hot rolling: remain unchanged. 2. Pickling: directly affiliated factory: unchanged; Meishan Iron and Steel Co., Ltd.: remain unchanged.

3. General cooling: directly affiliated factory headquarters: enamel steel (BTC1, BTC3, BTC4D, BTC6) increased by 100 yuan/ton, others remained unchanged; Meishan Iron and Steel Co., Ltd.: 200 yuan/ton discount on the basis of the price of the factory directly under Meishan Iron and Steel Co., Ltd. 4. Hot dip galvanizing: directly affiliated factory: unchanged; Meigang products: remain unchanged. 5. Electrogalvanizing: remain unchanged.

6. Aluminum and zinc plating: directly affiliated factory headquarters: unchanged; Meigang products: 50 yuan/ton discount on the price of the factory directly under Meigang. 7. Non oriented silicon steel: maintained unchanged. 8. Wire: remain unchanged.

Event comment:

The ex factory price of Baosteel was flat in November, and the traditional peak season mainstream steel mills were expected to diverge: under the circumstances of the recent rebound in domestic steel prices and the first increase in the ex factory price of mainstream products in November by WISCO, the company still chose to offer the ex factory price of November on a flat basis, which to some extent reflects the company's more cautious attitude towards the future market: 1. The peak season effect appeared, However, the current recovery of demand may not be enough to support the continuous rise of steel prices, especially in the manufacturing sector; 2. Although the steel price rebounded from the bottom in September, the monthly average price still fell slightly month on month, which to some extent indicates that the steel price has a greater rebound significance in stabilizing; 3. The continuous low operation of the future spot price difference also reflects the market's cautious expectation of the current spot steel price level. In the traditional peak season, mainstream steel mills are expected to have a certain degree of differentiation, indicating that the effect of traditional consumption and production peak season factors on steel prices may be slightly inadequate.

The price difference between the factory price and the market price of the main products remains unchanged: the factory price of the company's products remains unchanged, so that the price difference between the factory price and the market price of the company's hot rolled and cold rolled products remains unchanged. In terms of absolute value, the price difference of hot rolling is still at a high level, while the price difference of cold rolling is not at a high level.

The ex factory price was flat in November, and the business performance in a single period remained unchanged: a simple estimate shows that although the ex factory price of major products remained unchanged in November, the company's business performance in a single period was basically flat month on month. However, this calculation result will be affected by the final settlement price of raw materials. Our calculation considerations are also relatively simple, which can not fully simulate the changes in the actual business process, and may be different from the actual business data.

Considering the impact of asset divestiture, it is estimated that the company's EPS in 2012 and 2013 will be 0.62 yuan and 0.38 yuan respectively, maintaining the "recommended" rating.

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