Title China Steel Chemical (1723 TT) Buy, TP: NT$190
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Title:China Steel Chemical (1723 TT) Buy, TP: NT$190
Download File:1723 TT China Steel Chemical long report 180510--sinopac.pdf 
 
Summary:Maintain Buy, TP at NT$190 (24x 2019 P/E): 1) Steady feedstock supply from the two blast furnaces of Formosa Ha Tinh Steel Corporation (FHS, 50% owned by China Steel 2002 TT) will allow CSCC to expand its operational scale; 2) Demand for electric vehicles (EVs) will energize demand for cathode materials; 3) Rising oil prices in 2018F (our projection) should elevate benzene and creosote oil prices and thus drive up CSCC¡¦s 2018 earnings; 4) Valuation: We forecast 2019 EPS at NT$7.85 (+21% YoY), buoyed by stable raw material supply from FHS¡¦s two blast furnaces, rising product prices, and expanding demand for cathode materials from China. CSCC is currently trading at ~20x 2019 P/E (vs. historical P/E of 14x-28x). Our target P/E of 24x assumes CSCC can sustain its momentum over the long term.
  
Date:2018/06/11
Author:TaiwanResearch.com
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