BlueScope Steel Limited

L1 Capital Long Short Fund has reaffirmed its investment thesis in BlueScope Steel Ltd, maintaining and even increasing its position during the recent share price weakness. The Fund continues to hold BlueScope because it believes the company remains fundamentally strong, despite a broader sell-off in global steelmakers driven by falling U.S. and Asian steel spreads and rising bond yields. L1 Capital Long Short Fund notes that steel demand in both the U.S. and Australia remains resilient, and while U.S. steel margins have moderated, they remain at healthy levels with limited downside due to reduced arbitrage from imports. The Fund sees strategic value in BlueScope’s recent acquisitions of MetalX and Coil Coatings, and the expansion of the North Star plant in Ohio, which is expected to boost earnings as it ramps up. Additionally, BlueScope’s strong balance sheet supports its ongoing $985 million share buyback and positions it to pursue further low-cost capacity expansions. The planned $1 billion investment in the Port Kembla blast furnace upgrade also reflects progress toward the company’s ESG and carbon reduction goals. L1 Capital Long Short Fund believes BlueScope’s current valuation does not adequately reflect the company’s quality assets and long-term growth potential.

L1 Capital Long Short Fund continues to hold BlueScope Steel despite a recent decline in its share price, which mirrored weakness across the offshore steel sector as U.S. and Asian steel spreads contracted. While U.S. steel spreads have dropped from record highs, they remain healthy and are stabilizing. BlueScope remains focused on expanding its U.S. operations, including an 850ktpa capacity expansion at its North Star facility, the acquisition of Coil Coatings, and the creation of BlueScope Recycling through its purchase of MetalX. With a strong net cash position, BlueScope is poised to continue its significant share buyback program while investing in both U.S. and Australian businesses. Despite the recent pullback, L1 Capital believes BlueScope is undervalued, trading at a low multiple of ~4.0x FY23 EV/EBIT and ~6.0x FY23 P/E, and continues to see significant potential in its unique and strategically positioned asset base.

L1 Capital Long Short Fund continues to hold BlueScope Steel Ltd following a strong quarter, with shares benefiting from a recovery in U.S. steel spreads, which supported positive second-half earnings expectations. The company is executing a focused growth strategy in the U.S., including a significant capacity expansion at its North Star facility, the acquisition of Coil Coatings (the second-largest U.S. metal coating company), and the establishment of BlueScope Recycling through the MetalX acquisition. While the recent share price rally is encouraging, L1 Capital believes the market continues to undervalue BlueScope’s unique and strategic asset base. The fund remains confident in the company’s long-term growth prospects, especially as it expands its footprint in the U.S. and enhances its competitive position in both steel and recycling.

L1 Capital Long Short Fund continues to hold its position in BlueScope Steel, as the company's shares rose by 11% over the month. This performance was driven by strong U.S. steel spreads, which remain above long-run averages, providing positive momentum for BlueScope’s second-half earnings expectations. The company is focused on expanding its U.S. operations through three key initiatives: the 850ktpa capacity expansion and 500ktpa debottlenecking project at its North Star facility in Ohio, the acquisition of Coil Coatings (the U.S.'s second-largest metal coating/painting company), and the creation of BlueScope Recycling from its acquisition of the MetalX recycling business. Despite the recent share price gains, L1 Capital believes the market significantly undervalues BlueScope’s unique and strategic asset base, reinforcing the Fund’s positive outlook on the company.

L1 Capital Long Short Fund has updated its investment thesis on BlueScope Steel Limited, following a strong share price performance driven by a strengthening in U.S. steel spreads after the resolution of the United Auto Workers strike. This improvement led the company to revise its first-half FY24 earnings guidance to the top end of its previous range. L1 Capital Long Short Fund continues to hold BlueScope because it expects the strong U.S. steel spreads to provide a tailwind for the company’s second-half earnings. Additionally, BlueScope is strategically expanding its U.S. footprint, including increasing capacity at its North Star facility, acquiring Coil Coatings, and establishing BlueScope Recycling through the purchase of MetalX. The Fund remains confident that the market undervalues BlueScope’s strategic asset base, particularly within the largely consolidated U.S. steel sector, providing significant upside potential.

L1 Capital Long Short Fund has provided an updated investment thesis on BlueScope Steel Limited, highlighting its strong performance driven by improving U.S. steel spreads. U.S. steel prices increased by 9% in December and 61% during the December quarter, following the resolution of the United Auto Workers strike. L1 Capital Long Short Fund continues to hold BlueScope because it believes the company is well-positioned to benefit from continued strength in U.S. steel prices and delivery lead times, which should support strong second-half earnings. Additionally, recent M&A activity, such as Nippon Steel’s agreement to acquire U.S. Steel, further underscores the potential value of BlueScope’s U.S. operations. The company is strategically expanding its U.S. footprint, including capacity expansion at its North Star facility, acquiring Coil Coatings, and establishing BlueScope Recycling through the acquisition of MetalX. The Fund remains confident that the market undervalues BlueScope’s unique and strategic asset base, particularly within the largely consolidated U.S. steel sector, providing further upside potential.

L1 Capital Long Short Fund has updated its investment thesis on BlueScope Steel Limited, noting the company’s strong performance driven by the ongoing strengthening of U.S. steel spreads. U.S. steel prices rose by 61% during the December quarter following the resolution of the United Auto Workers strike, positioning BlueScope for strong second-half earnings, as U.S. steel delivery lead times and prices remain well above historical averages. L1 Capital Long Short Fund continues to hold BlueScope because it believes the company’s U.S. operations will continue to benefit from significant M&A activity in the U.S. steel market, including Nippon Steel’s agreement to acquire U.S. Steel. BlueScope’s expansion strategy, which includes increasing capacity at its North Star facility, acquiring Coil Coatings, and establishing BlueScope Recycling through the acquisition of MetalX, further enhances its growth potential. The Fund continues to view BlueScope’s unique and strategic asset base as significantly undervalued by the market, especially given the resilience of the U.S. steel sector, and believes there is substantial upside potential for the company moving forward.

L1 Capital Long Short Fund continues to hold its position in BlueScope Steel Ltd. (Long -8%) despite recent underperformance due to a decline in U.S. steel prices. This price drop has been driven by an increase in domestic capacity and inbound imports, coupled with weaker demand. However, L1 Capital remains positive on BlueScope's outlook, as U.S. steel spreads are still healthy, supporting strong profitability from its U.S. operations. The company’s strategy to expand its U.S. business, including the ongoing North Star steelmaking facility expansion and plans to increase its downstream product offerings, positions it well for future growth. L1 Capital believes that the market continues to undervalue BlueScope’s unique and strategic asset base, as well as the resilience of the largely consolidated U.S. steel sector. With these fundamentals in place, the Fund sees significant upside potential in the company despite short-term volatility.

L1 Capital Long Short Fund has updated its investment thesis on BlueScope Steel Limited, maintaining its position despite recent underperformance due to weak global steel markets. The fund continues to hold because it believes the market is undervaluing BlueScope’s unique asset base and its long-term resilience. Despite challenges such as depressed Asian steel spreads and weaker U.S. markets, the company has demonstrated proactive management by targeting ~$200 million in cost savings to improve productivity and enhance business resiliency. L1 Capital Long Short Fund also highlights BlueScope's ongoing expansion in the U.S., particularly the North Star steelmaking facility, and its strategy to further diversify its product offerings. The fund views BlueScope’s largely consolidated U.S. steel sector presence as a significant strategic advantage, particularly as market conditions normalize. Given the strength of BlueScope's strategic assets and its focus on long-term growth, L1 Capital Long Short Fund remains confident in its investment despite short-term market volatility.

L1 Capital Long Short Fund continues to hold its position in BlueScope Steel despite a 16% decline in shares, which was driven by weak global steel markets. Asian steel spreads remain under pressure due to excess Chinese production, while U.S. steel markets have also softened amidst political and economic uncertainty. Despite these challenges, BlueScope has announced a target of ~$200 million in cost-out benefits to enhance productivity and improve business resiliency. The company is also expanding its U.S. business, including the ongoing development of its North Star steelmaking facility, and is exploring further investments to expand its product offerings. L1 Capital believes the market is undervaluing BlueScope's unique and strategic asset base, particularly the resilience of the largely consolidated U.S. steel sector. With a focus on long-term growth, cost control, and U.S. market expansion, the fund maintains its positive outlook on BlueScope’s future prospects.