An awaited upgrade
IMPROVED 2H23 EARNINGS GUIDANCE
Need To Know
- 2H23 EBIT guidance upgraded due to the strength of North American assets
- Australian steel products expecting resilient despatch volumes in 2H FY2023
- Re-affirm Buy rating due to divisional strength and ongoing buyback (~70% complete)
BlueScope announced an upgrade to its 2H FY2023 EBIT guidance to A$700-770m from A$480-550m (43% upgrade).
The upgraded outlook was due to improved pricing and spreads particularly in the US, with the main contributor being the North Star asset.
Other contributors to the upgrade are the North American coated product business seeing higher realised margins and Australian Steel products expecting resilient despatch volumes for 2H23.
Other segments are expected to perform in line with the guidance given in the 1H FY2023 result.
Investment View
Today’s upgrade is welcome news but is largely already in the share price. The share price is up ~25% year-to-date due to ongoing strength in HRC spreads and the market expecting overdue upgrades from the North Star asset.
Data out of Asia and the US still suggest that strength remains for demand and pricing which we believe will provide additional upside risk moving into 2H23.
BlueScope’s A$1.14bn buy-back is ~70% complete (A$342m remaining) and will continue to churn away in the half. The increased performance from the US assets may potentially provide the group with the ability for additional capital management opportunities.
We see continued upside for BSL at current levels due to the recovery of global economies driving demand growth. Alongside this, with a buyback underway and the possibility for further capital return opportunities, we find it difficult to see significant short-term downside pressure.
We rate BSL a BUY.
Stock Overview
Share Price
Company Overview
BSL produces and sells metal coated and painted steel building products. They offer various products and solutions for industrial and commercial markets, serving customers in construction, manufacturing, automotive, agriculture industries.
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