Yapı Kredi Investment Recommended Steel Shares

Yapı Kredi Investment Recommended Steel Shares Yapı Kredi Investment recommended steel shares. Yapı Kredi, recommended "buy" in Erdemir and Kardemir. Turkey is the world's seventh and Europe’s largest steel producer. According to the data, as of the third quarter of this year, crude steel production was 25.9 million tons, while total steel production in the same period increased by 15 percent to 21.9 million tons. In the report of Yapı Kredi Invest, it is stated that the demand outlook of the sectors that consume steel heavily is high; It was noted that the message was given that there would be a better pricing environment compared to the previous estimates. Stating that Erdemir and Kardemir were reconsidering the valuation models within the framework of the new macro economic situation, especially in exchange rates, Yapı Kredi Invest increased the target prices for both producers. It was pointed out that with the recovery in consumer sectors such as automotive, kitchen appliances and construction, where steel is used extensively, annual demand increased by 15 percent. In the report, which stated that the trend in steel prices is trending upward, it was stated that hot rolled steel (HRC) prices fell to $ 395 per ton in May due to the negative impact of the coronavirus epidemic, but there have been signs of recovery with the strengthening of demand since June. The average price in November was 562 dollars. In the same period last year, the price was $ 438. Yapı Kredi Invest has increased the 12-month target price at Erdemir from 12.3 TL to 14.5 TL. With the new target price, Erdemir has the potential to increase by 28 percent in the share, based on the debt-free balance sheet, regular dividend payments and the 3.9 firm value / EBITDA multiplier in 2021, Yapı Kredi Invest recommends to "buy" the shares. In Kardemir, the institution, which maintains the "buy" recommendation by increasing its target price from 4.8 TL to 6.1 TL, underlined the ongoing increase in sales income and reduction of debts.   What Risks Could Be in Iron and Steel? For Erdemir and Kardemir, the main risks were cited as demand not being as strong as expected and the increase in raw material prices not appropriately reflecting end-user prices in steel. On the other hand, the European Union's request for hot rolled steel to be registered at customs came to the fore as one of the important risk factors of the sector. In the statement made by the European Commission in mid-November, the following statements were used: “Hot rolled steel shipments made in Turkey are recorded. If there is a conclusion of damping there will be an investigation retroactively in order to apply the necesseray tariffs.” In addition, customs registration procedures are expected to continue until mid-2021.   Source: Bloomberg HT