Macquarie: Raising Ma Steel's rating to outperform the market, the target price was raised to HK$5.6
Macquarie published a research report indicating benefiting from supply-side reforms 2.0, $MAANSHAN IRON (00323.HK)$ Net profit after tax for the first quarter rose 300% year-on-year to RMB 1.5 billion, beating expectations and returning to 2018 levels; the sector is expected to maintain its good gross profit. The bank raised its investment rating from neutral to outperforming the market and raised the valuation base from 0.5 times to 1.2 times the forecast market account ratio for this year, and the target price increased accordingly from HK$2.5 to HK$5.6. The bank believes that the results of its diversified product portfolio and efficiency reforms are beginning to show. Considering production limits and new capacity replacement policies, etc., the bank raised the Mainland steel price forecast by 8% to 16% for the 2021-2025 fiscal year, and accordingly raised Ma Steel's earnings forecast per share by 80% to 98% from 2021 to 2022. According to the bank, supply-side reforms in the mainland 2.0 have brought critical valuation reviews to the steel industry.
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