Angang Steel Company Limited is a China-based company principally engaged in the production and distribution of steel. The Company’s main products include hot-rolled steel sheet products, cold-rolled steel sheet products, medium and heavy sheets and other steel products. The Company distributes its products within the domestic market and to overseas markets.
A butterfly effect as a result of the invasion. Steel shipments from key exporter Ukraine have been halted following Russia’s invasion of its neighbor early-Feb. Ukraine’s steel accounts for 10% of Europe’s import. The overhang of war could push steel prices higher in the near term.
Inflation concern is the next focus. The US, Europe, and China released their inflation data recently, showing that inflation pressure is still high. Commodities including oil and gas, metals, and agricultural products have been climbing with an increase in fund inflows. Hedging is necessary during the rising inflation cycle.
Positive profit alert for FY21. In January, the company announced a positive FY21 profit guidance. Net profit attributable to shareholders of the company jump by 256% YoY to RMB7.04bn. The strong earnings were due to higher selling prices and significant cost reduction.
The updated market consensus of the EPS growth in FY22/23 is -9.88%/1.72% YoY respectively, which translates to 3.8x/3.7x forward PE. Current PER is 3.6x. FY22F/23F dividend yield is 10.1%/10.6%. Bloomberg consensus average 12-month target price is HK$5.89.
