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MarketScreener Homepage  >  Equities  >  Shanghai Stock Exchange  >  Baoshan Iron & Steel Co., Ltd.    600019   CNE0000015R4

BAOSHAN IRON & STEEL CO., LTD.

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'Nothing off-limits': Thyssenkrupp could sell steel business in historic shift

05/19/2020 | 10:21am EST
FILE PHOTO: Thyssenkrupp's logo is seen outside elevator test tower in Rottweil

By Christoph Steitz and Tom Käckenhoff

Thyssenkrupp could sell most of its steelmaking division, its CEO said on Tuesday, marking a historic reversal in strategy for the German conglomerate which has built its 200-year-old legacy as an industrial champion on the business.

"Nothing is off-limits anymore," Martina Merz said when asked by Reuters if Thyssenkrupp could a sell a majority stake in the steel business. She warned, however, that any disposals would be difficult to pull off in the current environment.

"M&A markets are almost dead," she said.

Merz was speaking hours after announcing that the group was in talks with steel industry peers about consolidation options. She said the coronavirus pandemic was opening up new possibilities for cooperation.

"We are drawing on the full range of options," she said. "That means all forms of consolidation are being looked at, including mergers, takeovers, us acquiring peers, and us developing the unit independently."

The fact that the steel division is no longer deemed an essential part of Thyssenkrupp represents a fundamental shift for a company that started off life in 1811 when Friedrich Krupp set up a factory to make cast steel.

The steel business, the second-biggest in Europe by sales, is reeling from weakening demand, cheap Chinese imports and a botched attempt to merge it with the European division of Tata Steel, a deal blocked on antitrust concerns.

Shares in Thyssenkrupp have lost nearly two-thirds of their value over the past 12 months after a raft of profit warnings.

The announcement accelerates Thyssenkrupp's dismantling, a process that started last year when the group decided to sell its crown jewel: its elevators unit. Some investors say the vast conglomerate, which makes everything from car parts to submarines, should be broken up to maximise value.

Thyssenkrupp shares were up 2.3% at 1400 GMT.

FACTBOX on Thyssenkrupp's new structure

Sources previously told Reuters that contact between Thyssenkrupp and Tata Steel never broke off and that both were still in talks about consolidation.

Thyssenkrupp is also in discussions with Sweden's SSAB and China's Baoshan Iron & Steel, sources familiar with the matter said.

Baosteel declined to comment as did SSAB. Tata Steel Europe had no immediate comment.

Germany's powerful union IG Metall said any consolidation move would have to safeguard jobs, warning it would not accept additional job cuts at Thyssenkrupp.

The steelmaking business accounts for more than a fifth of Thyssenkrupp's sales, making it the company's second-biggest unit after material services.

(Additional reporting by Arno Schuetze; Editing by Michelle Martin and Pravin Char)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AT HOME GROUP INC. 1.54% 19.14 Delayed Quote.248.00%
BAOSHAN IRON & STEEL CO., LTD. 0.00% 6.38 End-of-day quote.11.15%
FINCANTIERI S.P.A. -1.00% 0.644 Delayed Quote.-30.08%
JUST GROUP PLC 0.79% 57.65 Delayed Quote.-27.03%
SALZGITTER AG 0.72% 17.43 Delayed Quote.-11.79%
SHIFT, INC. 3.39% 15270 End-of-day quote.91.35%
SSAB -1.57% 27.62 Delayed Quote.-15.92%
TATA STEEL LIMITED 5.16% 568.9 End-of-day quote.20.53%
THE NEW HOME COMPANY INC. 0.52% 5.76 Delayed Quote.23.61%
THYSSENKRUPP AG -1.10% 5.564 Delayed Quote.-53.79%
WILL GROUP, INC. 0.91% 999 End-of-day quote.-20.21%
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Financials
Sales 2020 281 B 42 808 M 42 808 M
Net income 2020 11 109 M 1 690 M 1 690 M
Net Debt 2020 37 352 M 5 682 M 5 682 M
P/E ratio 2020 12,7x
Yield 2020 4,05%
Capitalization 141 B 21 399 M 21 411 M
EV / Sales 2020 0,63x
EV / Sales 2021 0,61x
Nbr of Employees 52 323
Free-Float 29,7%
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Technical analysis trends BAOSHAN IRON & STEEL CO., LTD.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 6,89 CNY
Last Close Price 6,32 CNY
Spread / Highest target 36,4%
Spread / Average Target 9,05%
Spread / Lowest Target -15,5%
EPS Revisions
Managers
NameTitle
Ji Xin Zou Chairman
Yong Hong Zhu Chairman-Supervisory Board
Mei Fen He Member-Supervisory Board
Jin Gang Zhang Director
Han Sheng Yu Member-Supervisory Board
Sector and Competitors
1st jan.Capitalization (M$)
BAOSHAN IRON & STEEL CO., LTD.11.15%21 399
CITIC PACIFIC SPECIAL STEEL GROUP CO., LTD.57.54%16 311
CHINA STEEL CORPORATION-3.35%12 485
JSW STEEL LIMITED33.05%11 688
EVRAZ PLC-2.92%7 639
BLUESCOPE STEEL LIMITED14.87%6 415