2010年4月印度有色金属与矿产行业研究报告

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【出版时间及名称】：2010年4月印度有色金属与矿产行业研究报告
        【作者】：德意志银行
        【文件格式】：pdf
        【页数】：95
        【目录或简介】：

Table of Contents
Investment ideas ............................................................................... 4
Indian ferrous industry in a sweet spot.....................................................................................4
Can Indian steel companies pass on escalating raw material prices?.......................................5
Execution prowess will stand out as a strong differentiator .....................................................6
Steel - Global Peer Valuation ........................................................... 7
Iron ore - Global Peer Valuation....................................................... 8
India – Robust consumption, constrained supply .......................... 9
India – a unique and compelling geography for steel producers...............................................9
India’s steel consumption set for strong growth ....................................................................11
Indian consumption will outpace production ..........................................................................12
We see foreign steel companies forging JV’s with Indian companies....................................14
India to emerge as large importer of steel between FY15-20.................................................15
Execution prowess will stand out as a strong differentiator ...................................................16
Adequate and economic availability of coking coal will emerge as a key concern area..........16
India steel demand supply model.................................................. 18
Steel prices will offset higher raw material costs ........................ 19
Europe - Higher steel prices to offset higher raw materials costs ..........................................19
China - Much higher iron ore prices? Steel prices matter more..............................................20
Global Steel price performance...............................................................................................21
Iron ore – Paradigm shift................................................................. 22
Moving to quarterly pricing .....................................................................................................22
Producers aligned –now..........................................................................................................23
Demand increase remains the underlying driver.....................................................................23
Sesa Goa .......................................................................................... 27
JSW Steel......................................................................................... 51
Tata Steel Limited ........................................................................... 67
Steel Authority of India................................................................... 75
Appendix: Indian iron ore overview............................................... 83
Major player in global iron ore market.....................................................................................83
Resource position is comfortable ...........................................................................................83
Heavy dependence on China ..................................................................................................84
China is worlds biggest iron ore importer despite blessed with captive iron ore ...................84
China’s insatiable appetite continues to surprise....................................................................85
Changing pricing dynamics .....................................................................................................86
Glossary of commonly used steel terms ....................................... 87
Steel making process ...................................................................... 89

Sesa Goa – Initiate with Buy rating and TP of INR540/share
We are initiating coverage on the stock with a Buy rating. Our Buy rating is premised on
earnings CAGR of 63% over FY10-12 driven by (1) supply constrained pricing strength in the
global iron ore market in 2010, and (2) management’ strategic focus on delivering volume
growth of at least 20-25% over FY10-FY12. Sesa is ideally positioned to ride the iron ore spot
price rally with a high exposure to the iron ore spot market. We also believe that FY10 will
mark a turnaround in company’s EBITDA margins and forecast 485bps expansion in EBITDA
margins over the forecast period as the iron ore pricing momentum continues and the
company ramps up production from its low cost Goa operations. An iron clad balance sheet
with FY10e net cash of INR44bn provides the financial strength to acquire further iron ore
reserves on a global scale.
JSW Steel – Initiate with Buy rating and TP of INR1,500/share
We are initiating coverage on JSW Steel with a Buy rating and target price of Rs1,500/share,
implying total return upside of 20% from current levels. Our Buy rating is premised on the
following (1) 48% CAGR in consolidated earnings over FY10-12 driven by aggressive organic
growth at JSW’s flagship Vijayanagar plant, (2) reduction in operating costs and value addition
from enhanced product mix, (3) potential to reduce its cost disadvantage relative to Tata Steel
India – among the world’s lowest cost producers of steel – by raising raw material self
sufficiency. In the immediate term, investors will also be assessing the ability of steel
companies to pass on steel making raw material costs. Though JSW will be hit by rising
prices of both iron ore and coking coal, we believe that the ongoing global steel price
momentum along with company's improving product mix and management's obsessive
quest for achieving operational efficiencies (setting up of coke oven batteries, increased PCI
use in blast furnace, commissioning of iron ore beneficiation plant) are likely to more than
offset the increased raw material costs in FY11.
Tata Steel – Key beneficiary of operating leverage
The global steel industry is witnessing a paradigm shift. With the end of a near three decade
legacy of annual pricing contracts for iron ore and coking coal, we confess that the visibility of
predicting both – iron ore and coking coal prices and steel prices – has become murkier than
ever before. Based on DB assumptions of raw material prices, we believe that Tata Steel will
be able to offset raw material pricing pressure in FY11. This is the core assumption, forming
the hallmark of our positive investment case for Tata Steel. Ironically, rising iron ore prices are
a strong positive for the company’s low cost Indian operations, which will benefit from a raw
material driven bout of domestic steel pricing strength in India. At Corus also, we expect that
the company will be able to weather our assumed raw material price hikes and post a
positive EBITDA/tonne of US$45, in FY11. Over FY11-12, we expect the Indian operations to
constitute 70% of consolidated EBITDA, reducing the company’s earnings dependence on its
low margin international operations. We believe that an accelerated ramp up of Indian
operations and particularly visible progress on the long delayed Orissa project will be seen as
a very positive catalyst for the stock. The stock trades at an EV/EBITDA of 6.2x FY11 earnings
implying a 15% discount to the valuation of Arcelor Mittal.
SAIL looks best positioned to benefit from raw material driven steel pricing strength
With iron ore constituting a larger constituent of the raw material price hikes, SAIL is the best
positioned Indian steel company, on account of its captive access to iron ore. We estimate
that under DB assumptions of raw material prices, SAIL would need to raise its realizations
by only INR2,000/tonne to pass on the full impact of the raw material costs. Consequently,
assuming a steel price hike equaling US$90-100/tonne, SAIL would see EBITDA margin
expansion in FY11.
Can Indian steel companies pass on escalating raw material
prices?
A positive answer to the above question remains critical to the investment case for steel
equities in the current year. Rising global steel production has shifted the balance of power
back in favor the global miners. Consequently, steel making raw material prices have been
rising. In addition, a near three decade legacy of annual contract prices has now given way to
quarterly contracts, making the predictability of steel prices difficult. We have assumed that
coking coal prices will rise by about 55% and iron ore prices by about 65% in the current year
(recent announcement of 90% hike in contracts is for quarterly contracts and not annual
contracts). This would tend to imply that a non integrated steel company, would need to raise
steel prices by the equivalent of US$135 to fully negate the impact of higher raw material
prices, assuming all else stayed constant. Assuming the recently announced 90% increase in
quarterly iron ore prices, we would estimate that steel prices for non integrated steel
companies would need to rise by the equivalent of US$150/tonne.
Indian integrated companies like Tata Steel (Indian operation) and SAIL are well positioned to
benefit from the price hikes, given captive access to ore and will need to raise steel prices in
a range of US$25-45/tonne. Companies like JSW – which are non integrated will need to raise
steel prices by US$80-90/tonne (based on our assumption that NMDC will not raise prices in
line with global prices). We anticipate that Indian steel producers should not be constrained
from raising prices by the equivalent of US$100/tonne.

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关键词：行业研究报告 有色金属 研究报告 行业研究 consolidated 研究报告 行业 有色金属 印度 矿产