Margins and EBITDA/t slide
Baosteel posted disappointing Q307 results. Despite the 15.6% YoY increase in
total sales to Rmb50.1bn, net profit decreased 49.7% to Rmb2,389m. The gross
margin contracted 43% to 11.6%. We estimate EBITDA/t fell 41% YoY to
Rmb1,185/t (US$158/t). Net profit in 9M07 reached Rmb10,548m, or 65% of our
full-year forecast of Rmb16,270m.

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