BSL - Bluescope Steel

[notting]

Is the insanity finally over? 16% down!
Even at $9 this is ridiculous and it will hit 9. currently 11.84 after 16% drop.

 

[Garpal Gumnut]

I sold my BSL a few years ago and am unfamiliar with them now.

Anyone know what they actually do atm.

gg

 

[bigdog]

MELBOURNE, Aug 21 (Reuters) - Australia's Bluescope Steel (BSL) warned on Monday earnings are set to fall in the current half, hit by import competition and soaring power and gas prices locally and weaker margins in the United States.

At the same time, the country's biggest steel maker flagged its well-respected chief executive, Paul O'Malley, would retire in December. He will be replaced by the head of the company's Australian arm.

Bluescope said underlying earnings were set to drop 20 percent in the current half from the second half of the 2017 financial year to around A$422 million ($334 million), implying a 30 percent drop from a year earlier.

"Productivity improvements ... are not yet fully offsetting the scale of energy cost escalation in FY2018," the company said, as it released results for 2017.

Underlying profit rose 112 percent to A$650.8 million, based mainly on cost-cutting. However the result was below market forecasts of A$682 million, according to Thomson Reuters I/B/E/S.

And its final dividend of 5 cents a share was also below market forecasts for 7 cents.

However Bluescope said it would return a further A$150 million to shareholders through an on-market share buyback.

====================================================================

Mr O'Malley also revealed that BlueScope had been under investigation by the Australian Competition and Consumer Commission over potential cartel conduct relating to the supply of steel products in Australia in late 2013 to mid-2014. He didn't want to go into specifics but said BlueScope was "fully co-operating".

Read more: http://www.afr.com/business/manufac...sella-to-be-ceo-20170818-gxzmud#ixzz4qLNUzgrF

 

[notting]

import competition and soaring power and gas prices

That alone should make you run for your life.

Bluescope said it would return a further A$150 million to shareholders through an on-market share buyback.

I guess the ceo who is now leaving is going to show the share price performance, he probably won't mention the buy backs. Anyone buying Bluescope at these levels is an idiot and well Bluescope has been a major buyer!

 

[brty]

Don't we all just love high management fees for a company that knows that financial year is going to be worse than last year, yet has spent $150m since March on a share buy-back, and will continue to do so.
I personally call good management when they pay off debt when they know performance is declining, and then do a buy back when share price is a lot lower.
Paying top dollar for a buy-back is probably helping some large players that wanted to reduce their holdings, not good for ordinary shareholders. They get bonuses for these type of decisions, not good!!

I agree with Notting.

 

[Indoril]

Underlying profit rose 112 percent to A$650.8 million, based mainly on cost-cutting. However the result was below market forecasts of A$682 million

Some people are just never happy

 

[Miner]

That alone should make you run for your life.


I guess the CEO who is now leaving is going to show the share price performance, he probably won't mention the buy backs. Anyone buying Bluescope at these levels is an idiot and well BlueScope has been a major buyer!

Notting
You always have candid comments.
I have been watching BlueScope and having worked in a similar steel plant in my past life, I believe the market has over reacted and has been very greedy to push the expectations. Yes, Paul's legacy will be gone but the new CEO is highly competent too. The only concern for me would be the investigation and cat coming out of the pigeon.
A low (too low) dividend, high cash, and excellent EBIT are good for me in a long term scenario. But when Notting (there are few other posters too, when I look up) says something, honestly I always think twice.
Could I ask SKC, So Cynical and Tech A if you guys are following BSL please make comments on BSL performance?

 

[skc]

I have been watching BlueScope and having worked in a similar steel plant in my past life, I believe the market has over reacted and has been very greedy to push the expectations.

Yes and no as the two parts of your statement kind of contradicts each other. If the market has been "greedy" to push the expectations, then the market hasn't over reacted. Because the share price should not have been $14+ if it wasn't for the "greedy" expectations. A move back towards the "proper" expectation is not an overreaction - it's a warranted reaction.

And I do believe today's price action is very much warranted. The reported number is a slight miss, the FY18 H1 forecast is some 20-30% below market consensus, a very well respected CEO is leaving (doesn't matter who's succeeding, it is a negative at least temporarily), and there's a ACCC cartel investigation hidden somewhere in the presentation. The CEO and ACCC news alone would have each knocked 5-8% off the share price... the slight miss may be 3-5% given where the share has been trading, and the weak guidance is worth easily 15%. So it wouldn't surprise me if there's more weakness to come.

BSL has done really well to recover from a near death experience. It didn't seem that long ago that they were sharing a death bed with their half brother Arrium. They have managed their costs (and their industrial relations) very well, made a great acquisition in US and got the industry tailwind and regulations going their way. That's the success story of the last 2 years.

BSL is a cyclical stock... May be this is just a temporary hiccup in a prolonged upward cycle, or it could be start of a weaker period. The current multiple isn't demanding, even with a weaker FY18. But the market may start focusing on some of the negative headwinds that BSL can't really control... and hence a negative bias on the share price.

 

[Miner]

Many thanks SKC for your thoughtful and balanced response as always and I fully agree. Yes, looking back, I did contradict when realising market was greedy and hence the escalated price of BSL. You were right on saying the commodity cycle for steel market.
All are good points and thanks to you as well as Notting for prompting me to think twice.
Like iron ore/nickel /cobalt price demands are related to steel so I will cautiously watch BSL movement. I do have some emotional bias with BSL having made, shaped and treated steel for more than 12 years in a slightly larger factory than BSL.
Returning to BSL performance, I was a bit surprised to see about 5% increase whereas BHPB made a bumper profit. Probably BHP's performance has given BSL holders some hope to have increased steel demand. BTW I believe BSL purchases iron ore from IOC Canada and not BHPB or any of the Australian based miners. If that is correct then it is ironic (?) because IOC Iron Ore Canada is owned by Rio Tinto.
I am not complaining as put a cautious purchase of BSL at 10.95 yesterday and good to see the jump even for a short-term pleasure.
Cheers

Yes and no as the two parts of your statement kind of contradicts each other. If the market has been "greedy" to push the expectations, then the market hasn't over reacted. Because the share price should not have been $14+ if it wasn't for the "greedy" expectations. A move back towards the "proper" expectation is not an overreaction - it's a warranted reaction.

And I do believe today's price action is very much warranted. The reported number is a slight miss, the FY18 H1 forecast is some 20-30% below market consensus, a very well respected CEO is leaving (doesn't matter who's succeeding, it is a negative at least temporarily), and there's a ACCC cartel investigation hidden somewhere in the presentation. The CEO and ACCC news alone would have each knocked 5-8% off the share price... the slight miss may be 3-5% given where the share has been trading, and the weak guidance is worth easily 15%. So it wouldn't surprise me if there's more weakness to come.

BSL has done really well to recover from a near death experience. It didn't seem that long ago that they were sharing a death bed with their half brother Arrium. They have managed their costs (and their industrial relations) very well, made a great acquisition in US and got the industry tailwind and regulations going their way. That's the success story of the last 2 years.

BSL is a cyclical stock... May be this is just a temporary hiccup in a prolonged upward cycle, or it could be start of a weaker period. The current multiple isn't demanding, even with a weaker FY18. But the market may start focusing on some of the negative headwinds that BSL can't really control... and hence a negative bias on the share price.

 

[notting]

Some people are just never happy

My bottom line is that yes they punters were happy in front running it up to 3.50 after the government rescued it and they started reducing debt.
What happened after that is market madness.
It will see $6 in the medium term I guarantee it!

 

[Miner]

Good one Notting. Damn to BT Wrap. My yesterday's order can not be sold unless the transaction settled. So in two days time, BSL would probably be dived down and I will be bottomer again.

 

[greggles]

Bluescope Steel is extending its existing share buy-back by another $150 million after lifting its first-half net profit by 23% to $441.2 million. BSL sales revenue has increased by 7% to $5.48 billion as a result of higher steel prices. The company says it will pay a partially-franked interim dividend of 6c per share, compared to a fully franked 4c a year ago.

Good results for Bluescope Steel that appear to have beaten expectations. Share price is currently up 66c to $16.15. Five months ago it was under $11.

 

[bigdog]

Expect SP to rise today

ASX announcement today
BlueScope today announced that it expects underlying earnings before interest and tax (EBIT) for the six months ending 30 June 2018 to be around $680 million, compared to prior guidance of $606 million provided in February

https://www.asx.com.au/asxpdf/20180515/pdf/43v0zfhmhw9bgg.pdf

6123

 

[systematic]

I just had a look at my trades for BSL. This is one of 'those' where everything has been good, but could've been so much better!

I bought in November 2015 just below $3.90 and exited 6 months later ~$6.00 for a 55% gain.

I'm currently in at an average buy price of $14.12 (bought some in August 2017 and more in February 2018) which is another nice trade.

Had I simply held it'd be an almost 5-bagger in <3 years

 

[greggles]

BlueScope Steel about to make its third attempt at breaking through $18.75 in the last couple of months. The price action over the last week has been very bullish and there is no sign that BSL is ready to take a breather.

Up another 2.5% this morning and currently trading at $18.27.

 

[tech/a]

Greggles
I don't see anything abnormal in the chart.
It looks like a ranging pattern with supporting volume.
I think its breathing normally.

 

[greggles]

Greggles
I don't see anything abnormal in the chart.
It looks like a ranging pattern with supporting volume.
I think its breathing normally.

I agree with you about the ranging pattern. It's been trading between $16.75 and $18.75 for 10 weeks now, swinging up and down in a cyclical pattern. It's getting close to the upper limit of that range so I'm watching for a break above $18.75.

 

[tech/a]

Don't hold your breath

 

[Craton]

So breaking resistance would signal a trend higher (and also signal a possible trading opportunity), would that be the correct assumption greggles?

 

[greggles]

Don't hold your breath

I admit I may have gotten ahead of myself with BSL. It has since retraced to $17.93. I saw it bolt out the gate this morning and posted a little prematurely. I should have waited until it was closer to $18.75 and on higher volume.

So breaking resistance would signal a trend higher (and also signal a possible trading opportunity), would that be the correct assumption greggles?

I thought that a clear break above $18.75 on high volume might have indicated the start of a new leg up. BSL is currently at almost 10 year highs. You have to go back to 2008 to find prices at these levels.