UBS initiates coverage on Vulcan steel with a Buy rating and $9 target. The analyst highlights the company consistently achieves financial metrics well above the industry average and focuses upon maintaining or growing gross profit (GP)/tonne through steel price cycles.
Growth options include new customer wins and adding geographical regions or product categories via acquisitions, explains the broker. GP/tonne from FY21-23 is expected to be bradly flat despite falling carbon steel prices.
In a highly fragmented Australian market, UBS feels the company has a range of options to grow market share.
Sector: No Sector.
Target price is $9.00.Current Price is $8.10. Difference: $0.90 – (brackets indicate current price is over target). If VSL meets the UBS target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).