Ord Minnett monthly recommends BSL "accumulate", page-138

BSL -BLUESCOPE STEEL LIMITED

Credit Suisse rates BSL as Outperform (1) - Spreads in US spot hot rolled coil versus scrap continue to weaken, declining to US$309/t, which Credit Suisse notes is below the company's assumed US$394/t for the June half.

Spreads are yet to be affected by a probable rise in US domestic scrap prices. Credit Suisse expects more scrap may be converted to steel in Canada and exported to the US, taking US market share and reducing Canadian scrap exports.

While FY19 earnings appear unlikely to be affected significantly, the broker suspects FY20 earnings at North Star could come under pressure.

Outperform and $16.50 target retained.

Target price is $16.50 Current Price is $12.24 Difference: $4.26 If BSL meets the Credit Suisse target it will return approximately 35% (excluding dividends, fees and charges). Current consensus price target is $15.59, suggesting upside of 27.3%(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 1.14%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.73. 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 6.6.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 1.14%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.00. 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 8.1.Market Sentiment: 0.5All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources