ASTL at 1x adj. EBITDA, China, normal production resumesThose with short memory along with the short-sighted investors and traders overreacted a few days ago and dumped ASTL below US$6. They are those who often lose their shirt in the stock market.
However, the latest guidance repeats what ASTL had already noted last November when Q2 was out. This is what ASTL stated last November:
"We are focused on overcoming those transitory events to return our facilities to full operating capacity. We estimate the operational challenges to have a financial impact of $130 million on Adjusted EBITDA, with approximately 60% incurred in the second fiscal quarter and the balance to affect the third fiscal quarter. "
In other words, the latest guidance is consistent with what the company stated a few months ago regarding the coke conveyor fire and the negative impact on its results.
Specifically, ASTL had already stated that the negative impact on its Q3 results would be much lower than the negative impact on its Q2 results.
So based on the latest guidance, debt-free ASTL will make about $400 million in adj. EBITDA in the first nine months of FY 2023, and about $500 million in FY 2023.
This means that ASTL is ridiculously cheap at US$6.50 per share (or CAD$8.50 per share) with its current Enterprise Value being only 1 times the estimated adj. EBITDA for FY 2023:
“We expect to produce Adjusted EBITDA of $395 million to $405 million for the first nine months of our fiscal 2023. I am pleased that the plate mill has resumed normal production levels. We expect to return to more normalized shipments in calendar 2023...."
Additionally, the plate mill has resumed normal production, so the worst is behind us and the negative impact on Q4 will be ZERO.
On top of this, the steel prices are going up and China opens up...