Ord Minnett monthly recommends BSL "accumulate", page-149

BSL -BLUESCOPE STEEL LIMITED

Credit Suisse rates BSL as Outperform (1) - Credit Suisse US steel analysts have reduced hot rolled coil (HRC) and steel spread assumptions citing planned capacity additions, declining US steel tariff protection and the likely rise in scrap.

More HRC will enter the market in the second half of 2019 and the new capacity materially exceeds the most ambitious growth forecasts, in the broker's view.

This will force the closure of high-cost capacity. BlueScope's multiple geographic and end-market exposure as well as low steel production costs does reduce earnings volatility, the broker assesses.

Outperform and $16.50 target retained.

Target price is $16.50 Current Price is $11.73 Difference: $4.77 If BSL meets the Credit Suisse target it will return approximately 41% (excluding dividends, fees and charges). Current consensus price target is $15.59, suggesting upside of 32.9%(ex-dividends)The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 14.00 cents and EPS of 182.00 cents .At the last closing share price the estimated dividend yield is 1.19%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.45. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 184.1, implying annual growth of 24.1%.Current consensus DPS estimate is 14.2, implying a prospective dividend yield of 1.2%.Current consensus EPS estimate suggests the PER is 6.4.Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 14.00 cents and EPS of 136.00 cents .At the last closing share price the estimated dividend yield is 1.19%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.63. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 150.6, implying annual growth of -18.2%.Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 1.3%.Current consensus EPS estimate suggests the PER is 7.8.Market Sentiment: 0.5All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

From CreditSuisse 27/5/2019