Angang 1Q17 preliminary NPAT beats DBe and Bloomberg consensus
Angang announced a profit alert after market close on 13 April 2017. Its 1Q17preliminary profit was reported at RMB 1.07bn. The preliminary profit hasbeaten both DBe and Bloomberg consensus estimates, by attaining 35%FY17DBe and 42% of full year Bloomberg consensus estimates. The resultswere in line with the average market steel spreads of 1Q17 we tracked, whichimproved c.RMB200/t QoQ. We believe the results should be read positively bythe market and may trigger upward consensus earnings revisions, as thecurrent market consensus estimates appear too low, in our view.
　　Structural profitability improvement for steel industry, Buy reiterated
We are finding more evidence supporting our view of a structural profitabilityimprovement for steel mills, while the market may be concerned that Chinesesteel share prices will be affected by recent steel price corrections. See ourreport “Proof of structural changes; Buy reiterated for steel sector”， publishedon 12 April, 2017. The industrial real demand growth, potential industrialrestocking, and structural supply-side reform keep us bullish on the steelsector and prompt us to reiterate Buy on Angang, even in an environment of asteel price correction.