China Steel Sector（PDF 40）简介开始
Executive Summary
We initiate coverage on China’s steel sector and the top
three Chinese flat steel makers, Baoshan Iron & Steel,
Wuhan Steel Processing, and Angang Newsteel.
Baoshan Iron & Steel (Baosteel)
We initiated coverage on Baosteel (on 27 May 2004) with
a Buy recommendation and a 12-month price target of
RMB8.80. Baosteel is a world-class steel maker, one of the
most competitive in the world. It has some distinct
advantages: an enhanced product mix, strong profitaBIlity,
and growth potential. Its focus is on high-end downstrEAM
products. Thanks to its economIEs of scale, advanced
facilitIEs and unique location, its costs are relatively low,
while margins and returns are high compared with other
major Asian steel makers. In the long term, we belIEve the
company can achIEve sustainable growth through both
organic capacity expansion and industry consolidation. We
belIEve the market has wrongly correlated its share price
with the recent price correction in construction steel, thus
providing a good buying opportunity.
Wuhan Steel Processing (WSPC)
We initiated coverage on WSPC (on 25 May 2004) also
with a Buy recommendation and with a 12-month price
objective of RMB10.60. The company is planning to
acquire assets from its parent group, which should boost its
EPS by 255% in 2004 and 75% in 2005. As a result, we
belIEve WSPC will transform itself from a mid-sized
downstrEAM roller to China’s second-largest integrated steel
maker. The deal is priced on the net asset base and appears
to be a good deal for WSPC. Currently, WSPC is rapidly
expanding its capacity. With several new production lines
under construction, we belIEve it has the potential to
become a world-class steel maker, capable of competing
with Baosteel in the high-end market.
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