BROKER CALL- Maanshan Iron and Steel H-shrs upgraded to 'outperform' -Macquarie
BEIJING (XFN-ASIA) - Macquarie has upgraded China's Maanshan Iron and Steel's Hong Kong-listed shares to "outperform" from "neutral", with strong steel prices offsetting the company's rising raw material costs.
Sharp rises in spot hot-rolled coil prices in China have created a strong potential upside for the company's earnings, Macquarie said in a note.
"We anticipate that we will see further steel price forecast increases so we believe there continues to be upside risk," it said.
The company's share price has fallen substantially in recent weeks, with iron ore and coking coal prices soaring, making Maanshan "the cheapest stock in our Chinese steel universe," Macquarie noted.
It has raised its earnings forecast for the company by 4 pct for 2008 and 3 pct for 2009 "to reflect sharp steel price rises and new raw material assumptions."
Macquarie's target price for Maanshan Iron and Steel remains unchanged at 5.10 hkd.
The company closed today at 4.76 hkd.