Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

Nippon Steel Corporation / Equity Bottom-Up

<ul>
<li>FY26–30 plan lifts scale ambitions, but ¥6 tn capex and U.S. Steel integration keep free cash flow negative through FY26.</li>
<li>U.S. Steel synergies shift to FY27–28 amid labor, regulatory, and spread pressures, delaying ROCE recovery toward the 9–10% target.</li>
<li>Look cheap on NTM multiples, but elevated leverage, FX sensitivity, and sub-8% forward ROCE limit near-term re-rating.</li>
</ul>


FY26–30 plan lifts scale ambitions, but ¥6 tn capex and U.S. Steel integration keep free cash flow negative through FY26.
U.S. Steel synergies shift to FY27–28 amid labor, regulatory, and spread pressures, delaying ROCE recovery toward the 9–10% target.
Look cheap on NTM multiples, but elevated leverage, FX sensitivity, and sub-8% forward ROCE limit near-term re-rating.


Nippon Steel: Ambition Raised, Returns Deferred

APAC IPOs & Placements, Aequitas Research

Akshat Shah

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Nippon Steel Corporation / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/posco-holdings-inc" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">POSCO Holdings (005490 KS)</a> is looking to sell its remaining stake in <a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel Corporation (5401 JP)</a> to raise up to US$154m via a cleanup block trade.</li>
<li>This deal represents 1.6 days of ADV and is around 1% of shares outstanding.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



POSCO Holdings (005490 KS) is looking to sell its remaining stake in Nippon Steel Corporation (5401 JP) to raise up to US$154m via a cleanup block trade.
This deal represents 1.6 days of ADV and is around 1% of shares outstanding.
In this note, we will talk about the placement and run the deal through our ECM framework.


Nippon Steel Placement - Cleanup by Posco Right After Expiry of Previous Deal

<ul>
<li>Guidance cut (Business Profit ¥500 bn → ¥450 bn) as U.S. Steel delivers no profit contribution, overseas spreads weaken, and one-off losses weigh on earnings; domestic operations remain resilient.</li>
<li>Integration drag : $11 bn U.S. Steel modernization plan and rigid U.S. labor terms keep margins diluted and free cash flow negative; deleveraging and ROCE recovery deferred to FY27+.</li>
<li>Valuation rich, patience warranted: Trading at ~19× EV/EBITDA (vs peer median ~10×) with ROCE &lt; 8%; maintain Hold / Underweight until synergy visibility and free-cash-flow inflection emerge post-FY26.</li>
</ul>


Guidance cut (Business Profit ¥500 bn → ¥450 bn) as U.S. Steel delivers no profit contribution, overseas spreads weaken, and one-off losses weigh on earnings; domestic operations remain resilient.
Integration drag : $11 bn U.S. Steel modernization plan and rigid U.S. labor terms keep margins diluted and free cash flow negative; deleveraging and ROCE recovery deferred to FY27+.
Valuation rich, patience warranted: Trading at ~19× EV/EBITDA (vs peer median ~10×) with ROCE &lt; 8%; maintain Hold / Underweight until synergy visibility and free-cash-flow inflection emerge post-FY26.


Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

<ul>
<li>
<a href="https://www.smartkarma.com/entities/posco-holdings-inc" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">POSCO Holdings (005490 KS)</a> is looking to raise up to US$169m via selling some of its stake in <a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel Corporation (5401 JP)</a>.</li>
<li>This deal represents 1.5 days of ADV representing around 0.7% of shares outstanding.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



POSCO Holdings (005490 KS) is looking to raise up to US$169m via selling some of its stake in Nippon Steel Corporation (5401 JP).
This deal represents 1.5 days of ADV representing around 0.7% of shares outstanding.
In this note, we will talk about the placement and run the deal through our ECM framework.


Nippon Steel Placement - Relatively Small Deal with Recent Pick-Up in Momentum

<ul>
<li>Nippon Steel’s $14.9 billion acquisition of U.S. Steel, finalized in July 2025, significantly expands its North American presence but introduces margin and cost challenges.</li>
<li>Announced Plans: A $11 billion capex plan through 2028 targets a new EAF mill, Gary Works upgrades, and efficiency enhancements to drive synergies.</li>
<li>What to Watch: Monitor synergy execution, steel price trends, and U.S. Steel’s FCF generation to assess whether Nippon can offset margin dilution and balance sheet strain.</li>
</ul>


Nippon Steel’s $14.9 billion acquisition of U.S. Steel, finalized in July 2025, significantly expands its North American presence but introduces margin and cost challenges.
Announced Plans: A $11 billion capex plan through 2028 targets a new EAF mill, Gary Works upgrades, and efficiency enhancements to drive synergies.
What to Watch: Monitor synergy execution, steel price trends, and U.S. Steel’s FCF generation to assess whether Nippon can offset margin dilution and balance sheet strain.


Nippon Steel (5401.T) – Financial and Strategic Analysis Post-U.S. Steel Acquisition

Japan

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

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Nippon Steel Corporation (5401 JP)

Nippon Steel: Ambition Raised, Returns Deferred

Despite ambitious scale ambitions and U.S. Steel integration, negative free cash flow is projected through FY26 due to capex etc., delaying ROCE...

Rahul Jain

Nippon Steel Placement - Cleanup by Posco Right After Expiry of Previous Deal

Posco Holdings is looking to sell its remaining stake in Nippon Steel (5401 JP) to raise up to US$154m via a cleanup block trade.

Akshat Shah

Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Rahul Jain

Nippon Steel Placement - Relatively Small Deal with Recent Pick-Up in Momentum

Posco Holdings is looking to raise up to US$169m via selling some of its stake in Nippon Steel (5401 JP). In this note, we will talk about the...

Akshat Shah

Nippon Steel (5401.T) – Financial and Strategic Analysis Post-U.S. Steel Acquisition

Nippon Steel's acquisition of U.S. Steel boosts North American presence but faces challenges in margins and costs. Watch synergy execution and...

Rahul Jain

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nippon Steel: Ambition Raised, Returns Deferred

​Despite ambitious scale ambitions and U.S. Steel integration, negative free cash flow is projected through FY26 due to capex etc., delaying ROCE...

Rahul Jain

Nippon Steel Placement - Cleanup by Posco Right After Expiry of Previous Deal

Posco Holdings is looking to sell its remaining stake in Nippon Steel (5401 JP) to raise up to US$154m via a cleanup block trade.

Akshat Shah

Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

​Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Rahul Jain

Nippon Steel Placement - Relatively Small Deal with Recent Pick-Up in Momentum

Posco Holdings is looking to raise up to US$169m via selling some of its stake in Nippon Steel (5401 JP). In this note, we will talk about the...

Akshat Shah

Nippon Steel (5401.T) – Financial and Strategic Analysis Post-U.S. Steel Acquisition

​Nippon Steel's acquisition of U.S. Steel boosts North American presence but faces challenges in margins and costs. Watch synergy execution and...

Rahul Jain

Despite ambitious scale ambitions and U.S. Steel integration, negative free cash flow is projected through FY26 due to capex etc., delaying ROCE...

Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Nippon Steel's acquisition of U.S. Steel boosts North American presence but faces challenges in margins and costs. Watch synergy execution and...