BSL - Bluescope Steel

[Julia]

Re: Bluescope Steel! BSL

I'm happy to say that I sold yesterday at $8.65. Have just felt for a while that the negatives for BSL have been increasing.



Julia

 

[Chief Wigam]

Re: Bluescope Steel! BSL

I am not sure why you say it is too risky to set up shop in China. A lot of companies are doing it sucessfully. General Electric has gone in big time as one example.

Also in my line of work (we are an engineering co. that manufacture equipment, including from our China base and therefore buy steel) I have noted that local Chinese steel is not that much cheaper than imported steel.

 

[GreatPig]

Re: Bluescope Steel! BSL

I'm happy to say that I sold yesterday at $8.65

Excellent timing, Julia

I was watching the price turn back up and was considering buying back in for a short-term rise. After Thursday's step up, I was set to buy back in on Friday - until I saw the price that morning.

Just as well there's wasn't another up-day before the drop, or I would likely have been holding.

Cheers,
GP

 

[RichKid]

Re: Bluescope Steel! BSL

Excellent timing, Julia

I was watching the price turn back up and was considering buying back in for a short-term rise. After Thursday's step up, I was set to buy back in on Friday - until I saw the price that morning.

Just as well there's wasn't another up-day before the drop, or I would likely have been holding.

Cheers,
GP

This makes OST all the more attractive and maybe SSX. Hate to be a bottom picker atm.

 

[TheAnalyst]

Re: Bluescope Steel! BSL

Anyone got anymore news on the Bluescope story as i have gone long with a call warrant as of monday and plan to sit there for a while.

 

[Kauri]

Re: Bluescope Steel! BSL

Anyone got anymore news on the Bluescope story as i have gone long with a call warrant as of monday and plan to sit there for a while.

Hi The Analyst
According to my weekly charts of BSL it looks like a likely place to bounce up, another good call...

 

[TheAnalyst]

Re: Bluescope Steel! BSL

Hi The Analyst
According to my weekly charts of BSL it looks like a likely place to bounce up, another good call...

Do you want to know how i call em with out charts?

 

[Kauri]

Re: Bluescope Steel! BSL

Do you want to know how i call em with out charts?

The Analyst..
If you want to share how you do it I would be grateful. I am always ready to learn,

 

[TjamesX]

Re: Bluescope Steel! BSL

I don't know a lot about the BSL story, but I did note they got pounded when they revised earnings down to 85c per share?

Currently trading around $7.40

Thats a PE of 9.

Average PE for aussie market about 15, US more.

Fundamentally thats cheap, or there is some other reason why the market has reacted that way...ie market thinks earning will fall further in future?

either way a lot of negativity priced in which may or may not eventuate.

 

[TheAnalyst]

Re: Bluescope Steel! BSL

I don't know a lot about the BSL story, but I did note they got pounded when they revised earnings down to 85c per share?

Currently trading around $7.40

Thats a PE of 9.

Average PE for aussie market about 15, US more.

Fundamentally thats cheap, or there is some other reason why the market has reacted that way...ie market thinks earning will fall further in future?

either way a lot of negativity priced in which may or may not eventuate.

The earnings down grade has been projected between 85 cents and $1 per share at $7.40 thats a P/E of 8.7($7.40/0.85 cents=8.71) or at a $1 on $7.40 a P/E of 7.4%($7.40/$1=7.4). In the address to the market the director wasnt really sure that it would eventuate but was cautious.

On top of this is the share buy back which will increase the earnings per share as there will then be less shares on issue, therefore a lower P/E leading to another ajustment most likely to a higher share price.

Here we establish a fundamental trading range and from here we are then able to measure the volitility of a stock and put in a time span to get a number of periods and therefore we get a standard deviation and its implied volatility.

Heres a hint how i do it Kauri but dont worry the fundmanagers and there traders wont care that i share it becuase when they write various financial instruments they are for hedging they dont lose either way. They are risk managment tools to them and trading instruments to us as they use the bionomial tree with the black scholes method so there trades will not lose which way the stock actually goes.

I do look at charts as i once was a chartist but they are not the whole picture as i think they are visualisation tools but good for stocks that are moving fast and have no earnings.

 

[Kipp]

Re: Bluescope Steel! BSL

BSL down to $7.11 today and I just can't see why it fails to recover, even when there has been a series of positive company announcements.

As the analyst said previously, even when you use the corrected P/E ratio ~7-9 it still is trading well below it's competitors, Onesteel and Smorgon (both P/E's of about 15).
Any ideas on why the market is being so unkind to BSL?

 

[Kauri]

Re: Bluescope Steel! BSL

BSL down to $7.11 today and I just can't see why it fails to recover, even when there has been a series of positive company announcements.

As the analyst said previously, even when you use the corrected P/E ratio ~7-9 it still is trading well below it's competitors, Onesteel and Smorgon (both P/E's of about 15).
Any ideas on why the market is being so unkind to BSL?

Article in AirReview may explain some of it...

http://www.aireview.com/index.php?act=view&catid=8&id=3196&setSub=1

 

[Kipp]

Re: Bluescope Steel! BSL

Thanks for that Kauri, I agree it does sound pretty bleak for the steel market overall.

 

[Julia]

Re: Bluescope Steel! BSL

There have been warnings out for nearly a year now to the effect that China is gradually becoming a net exporter of steel whereas previously it was a net importer. This has been described in dozens of articles in the financial and daily media.

I sold out at $8.65 in early November and am thankful I did.

Julia

 

[TheAnalyst]

Re: Bluescope Steel! BSL

Just read that u sold out at 8.65 Julia that was a good move because if the net earnings per share are going from $1.34 to a minimum of 0.85cents then its value from say a high of $10.20 means a value to as low as $6.22 and a p/e of 7 would mean the stock would be valued at $5.95 and a p/e of 6 $5.10.

Now i know why macquarie has issued so many equity call warrants as of October 2005 because they know who ever was the suckers who bought BSLWMM and any similar call warrants have just delivered them all their dough that they used to purchase the warrants.

On a p/e of 10 then the stock will be at $8.50 and the only cautious point is the the chief director gave a minimum net earnings per share of between 0.85 cents and $1 so that a p/e of 10 at net earnings of $1 per share would give a share price of $10.00 then at certian time at cum dividend this also must be added to the calculated share prices.

Well thats the most fundamental trading range i can establish for the stock with good and bad scenarios of the net earnings per share taken into account.

 

[Ann]

8 February 2006
BlueScope's 2006 profit may decline 53% on China steel glut

Source: Bloomberg


BlueScope Steel Ltd., Australia's largest steelmaker, said annual profit will fall as much as 53 percent because of a glut in China. The company's shares slid 12 percent, their biggest slump in three months.

Earnings per share will be 65 Australian cents to 75 Australian cents in the year ending June 30, the Melbourne-based company said in a statement today. That's down from a record A$1.374 ($1.01) last year and is below analysts' estimates.

China, which produces a third of the world's steel, became a net exporter for the first time last year, forcing companies such as Mittal Steel Co. and Posco to cut prices and output. BlueScope said prices this quarter fell as much as 20 percent from the first half and the "weaker pricing environment could continue."

"This is not a global steel demand issue; it is a regional over-production and steel supply issue," BlueScope managing director Kirby Adams said

Shares of BlueScope Steel fell 90 cents to close on the Australian Stock Exchange at A$6.56, the lowest since June 25, 2004. Other steelmakers in Asia also fell. Shares of Posco fell 2.7 percent to 217,500 won, and shares of Nippon Steel Corp. fell 3 percent to 425 yen.
China output

Chinese steel production may increase 10 percent this year, the China Iron and Steel Association said last month, after jumping 25 percent in 2005.

"Given how high the market is, if there's anyone missing their targets, they're really going to be hammered in a big way," said James Holt, who helps manage the equivalent of $4.6 billion at Zurich Financial Services Ltd. in Sydney.

Posco, the world's fifth-largest steelmaker, last month said its fourth-quarter profit fell 68 percent as benchmark Asian prices declined because of overproduction in China. Posco forecast sales would drop as much as 12 percent this year, reflecting increased competition from China. Posco cut its sales estimate twice last year.
'Depression'

"We are entering a valley of depression such as we have never experienced before," Chairman Lee Ku Tae said in his New Year speech to employees on Jan. 2. "China has become a net exporter due to its active expansion over the recent years and has become an unavoidable threat sooner than expected."

BlueScope and its rivals are being squeezed by falling prices for their products and high raw materials costs. The prices of iron ore and coking coal, used in steel making, jumped to records last year as Chinese steelmakers compete for the supply. Iron ore prices may rise another 12 percent from April this year, according to a Bloomberg survey in November.

"The question now is what happens in the longer term," Tony Farnham, an analyst at Aegis Equities Research Pty., said in Sydney.

'The oversupply from regional steel production has pushed down commodity steel prices and put unwarranted demand tension into raw materials which is hurting global steelmakers," said Kirby Adams in the BlueScope's statement posted on the Australian Stock Exchange. "These pressures have flowed through Asia and into our domestic markets."
Pipes

BlueScope produces hot-rolled steel coil, a benchmark product which is processed to make pipes and tubes and is used in cars and buildings. It also paints, coat and process steel, turning it into roofs, fences and walls. It has plants in Asian countries including China, Vietnam and Indonesia.

Hot-rolled coil prices fell by more than $100 a ton recently, Adams said on a conference call. BlueScope had to cut prices in Asia for products including hot-rolled, cold-rolled and galvanized steel products.

Prices of hot-rolled coil for Japan, a benchmark product in Asia, may fall 28 percent this year to $429 a ton, from a year ago, according to a January forecast made by Sydney-based AME Mineral Economics.
Plant

BlueScope's Asian business posted a loss in the first half, BlueScope Steel said. The second half will be better for the unit, said BlueScope's Chief Financial Officer Paul O'Malley on a conference call with reporters.

The company is ramping up plant capacity in Asia, and has cut down on higher-cost materials in its inventories. Orders from customers are also starting to rise, O'Malley said.

In Australia, demand has been reduced from manufacturing and automotive customers, Adams said on the teleconference call. Higher oil prices reduced demand for cars, leading carmakers to slow orders for steel products, he said.

Kirby also said the company hasn't been approached with offers for mergers nor from a potential acquirer.

Asian Pacific steel stocks surged on Jan. 30, after Mittal Steel Co. made 18.6 billion euro ($22.3 billion) takeover bid for rival Arcelor SA, sparking speculation of more acquisitions.

The company said it expects to pay out at least 42 cents per share of dividend as previously announced. The company will report half-year earnings Feb. 20.

 

[TheAnalyst]

Things looking glim for BSL

China steel prices tipped to decline
Email Print Normal font Large font March 23, 2006 - 8:44PM

Chinese steel prices are likely to resume their fall in the second half of 2006 as growth in the country's demand for the metal slows, said an official at Baosteel, the world's sixth-largest steel maker.

Jia Yanlin, managing director of Baoshan Iron and Steel Co Ltd's raw material purchasing centre, told industry officials on Thursday a strong rebound in steel product prices since February was unsustainable, due to the nation's overcapacity.

"The growth rate in demand in 2006 will be much lower than in the past four years. The current output is very, very large," he said at a ferro-alloy conference organised by Metal Bulletin.

"Inevitably, prices will be on a downward path in the second half of this year."

Baosteel, China's largest steel maker, had a 2005 crude steel output of 23 million tonnes.

China's steel prices dived 32 per cent between last March and the end of last year, as capacity expansions led to a glut, especially in construction steel and flat products.

Yet prices rebounded in the first two months of 2006, allowing Baosteel to set its second-quarter prices more than 10 per cent higher than the first quarter.

Jia said factors underpinning the recent pick-up included a correction following a slump in prices last year, large exports and strong seasonal demand in the second quarter.

"We have a peak in demand in the second quarter every year," the official said. "But generally speaking, there is an oversupply (this year)."

Between 2006-2010, Jia said the growth in China's steel demand would slow to an average of about 6 per cent a year, from 21 per cent between 2000 and 2005.

Referring to China's fixed asset investment, which expanded by more than 25 per cent year-on-year in the last four to five years, the Baosteel official said: "I don't think China can keep such high growth rates for fixed asset investment."

"Fixed asset investment accounts for about half of GDP.

This has never happened in other countries."

Jia predicted many Chinese steel companies would suffer from losses and face cash flow and payment difficulties in future as steel prices decline. He also expected the industry to see many mergers and acquisitions.

Chinese steel firms' profits fell 74.6 per cent in the first two months of the year, compared with the same period of 2005, Chinese media said on Thursday, citing government statistics.

© 2006 Reuters, Click for Restrictions

 

[imaginator]

What the heck happened to BSL on Friday?
I put a stop loss at $7 on Thursday, and suddenly today it went to $7 from about 7.2 or 7.3. It was triggered!

 

[shinobi346]

China's disclosure of steel stockpiling athe ports triggered it probably. April and May were not good months but it's slowly climbing up again.

 

[pacer]

I think shorting bsl is a good way to go this week, not looking too good is it.
2nd profit downgrade and lots of sackings and closure of mills, and wouldn't surprise me if more closures happen over next few months.