BlueScope Steel Limited
BSL Details
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Rise post the fatal steel plant incident: BlueScope Steel Limited (ASX: BSL) recovered over 9.3% on May 17, 2016 after witnessing a heavy fall since May 09 till May 16 on the back of its steel plant incident. At the North Star BlueScope Steel plant in Delta, a refractory failure led to a wash out of molten steel from the South EAF shell, due to which an explosion occurred. Due to this event, BSL forecasted a production loss of over 35,000 metric tonnes and total financial pre-tax cost, including capital repairs, is expected to be in the order of US$5 million. Rise in the price of oil has also brought relief to resources stocks overall.
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Recommendation: BSL is expected to handle the situation efficiently. The recent correction also placed BSL at attractive P/E. We maintain our “Hold” recommendation on the stock at the current price of $5.49
Fortescue Metals Group Ltd
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FMG Details
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Cost efficiency efforts: Fortescue Metals Group Limited (ASX: FMG) stock rallied over 7.9% on May 17, 2016. The group is making efforts to enhance its cost efficiency and has set a cost target of $13/t by June 16 with a capex below $2/t. Again, some upswing came from the rise in the price of oil for the resources stocks overall.
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Recommendation: We recommend a “Hold” on the stock at the current price of $2.91
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Breakeven price (Source: Company Reports)
Santos Ltd
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STO Details
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Positive exploration results: Santos Ltd (ASX: STO) stock surged over 6.3% on May 17, 2016 given the recovering oil prices coupled with supporting data from China. The group’s exploration results have been positive with recent reports about AAL-4X appraisal well being spudded successfully.
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Recommendation: Having a good dividend yield, we maintain our “buy” stance on Santos at the current price of $4.13
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