2Q to see worsening GP
Steel GP worsening further since beginning of 2Q. The rising input costs have squeezed quarter-to-date unit steel GP performance. Accordingly, we cut our FY22F/FY23F earnings on a lower steel price assumption. We expect AnSteel’s unit GP to contract to RMB319/tonne and RMB316/tonne in 2022/2023, respectively.
Lacking catalyst in near term. We continue to hold a neutral outlook for the company in 2022. It is set to continue to prioritise cost reduction, ultra-low emission renovation projects, as well as low-carbon transformation. We believe the company’s rising cash position would enable the fulfilment of its need for investments for future projects.
Carbon development. AnSteel has set its goals for ultra-low emissions and carbon emission reductions for its Anshan, Bayuquan, and Chaoyang manufacturing bases, and has committed the capex investment needed for this purpose.