Investment Thesis:
Resilience to U.S. Steel Tariffs – BlueScope is largely insulated from U.S. steel tariffs due to its $2B+ investment in American operations, making it the fifth-largest U.S. producer. Only about 300ktpa of Australian exports are tariff-affected, while higher U.S. steel prices could boost margins at facilities like North Star. Its “manufacture in-country for country” approach allows it to benefit from protectionist policies.
Benefiting from AI Data Center Boom – Surging AI infrastructure demand is driving strong steel needs, especially in data centers. BlueScope’s Butler Manufacturing unit, a leader in pre-engineered metal buildings, is well placed to serve this market. U.S. data center spending is forecast to grow from USD 48B in 2024 to USD 112B by 2030 (15% CAGR), with BlueScope’s sustainable, efficient systems matching sector needs.
Rebuilding Demand from U.S. Disasters – Above-normal 2025 hurricanes and widespread U.S. wildfires are creating significant rebuilding demand for steel in infrastructure, housing, and utilities. Past disasters show similar surges in material needs. BlueScope’s U.S. footprint ensures it can meet demand, with the net effect likely positive despite tariffs.
Trade Plan:
- Expected Timeframe: short to medium term
- BSL has rebounded after short term earnings fall. Time to exit position (SELL)
- Sell @ $24.35 or better
Valuation and Financial Highlights
BlueScope’s shares are undervalued relative to peers and intrinsic metrics, defying the typical cyclical punishment in the steel sector. The company’s 1-year return of 24.1% underscores its resilience, while forecasts indicate continued profitability despite near-term EPS softness (-16.9% in FY24, projected -58.9% in FY25 Q2). Management’s share buybacks signal confidence in cash generation.
Disclaimer: The recommendation given is general advice only. It does not take into account your personal objectives, financial situation, or specific needs. This information should not be your sole resource when making such decisions. We strongly recommend you to seek the advice of financial, taxation, and legal professionals before finalising any investment decisions.