Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

A buy-side analyst with over 15 years of experience investing in Asian markets and specializing in the mid-small cap space, emphasizing value investing in companies with good free cash flows/dividends and long-term holding horizons. 
Exempt Financial Adviser (EFA) under CrossASEAN Research Pte Ltd. It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity, Bottom-up Analyst

Graftech: Encouraging Q4 2021, Stronger Pricing into 2022

Graftech Q1 2022: Debt Deleveraging Continues, LTA Pricing Overhang An Issue

Graftech: Headwinds Persist from Cost Inflation and Soft Pricing Guidance

Graftech: Graphite Electrode Play With Debt Deleveraging

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

GrafTech International Ltd / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/graftech-international-ltd" target="_blank" data-smartkarma-citation="entities:27124:1" rel="noopener">GrafTech International Ltd (EAF US)</a> delivered a solid Q3 2021 result and guidance on their conference call, and we believe that the stock, despite the 20% rally post results, is primed for a run in the short term.
Key highlights of the results and the conference call are:
<ul>
<li>Guidance for an increase in spot pricing by 7-9% QoQ for Q4 2021. A significant price increase can be expected for 2022. </li>
<li>Deleveraging continues at a decent rate, with net debt declining from 1.11 bn USD to 1.04 bn USD representing a 6.3% decline. We forecast the company will be net cash by 2023.  </li>
<li>The company also continues its shareholder-friendly corporate actions by authorizing a share repurchase of 150 mn USD. The company has now been authorized to repurchase up to 163 mn  USD in shares of the company's common stock, inclusive of the 13 mn USD remaining under the prior stock repurchase program as of the end of the third quarter this year.</li>
<li>While the company used a majority of the cash flow to reduce debt and plan to continue to do so through the balance of this year, in the third quarter, they also used 46 mn USD to repurchase 4.3 million shares of stock at an average price of $10.77.</li>
</ul>
Despite this rally, the stock trades at 6.8x FY22 PE and 5.3x EV-EBITDA conservatively on our numbers. Given the stability in cashflows over the medium-term, we believe the stock will rerate to an 8-9x multiple from here.

GrafTech International Ltd (EAF US) delivered a solid Q3 2021 result and guidance on their conference call, and we believe that the stock, despite the 20% rally post results, is primed for a run in the short term.
Key highlights of the results and the conference call are:

Guidance for an increase in spot pricing by 7-9% QoQ for Q4 2021. A significant price increase can be expected for 2022. 
Deleveraging continues at a decent rate, with net debt declining from 1.11 bn USD to 1.04 bn USD representing a 6.3% decline. We forecast the company will be net cash by 2023.  
The company also continues its shareholder-friendly corporate actions by authorizing a share repurchase of 150 mn USD. The company has now been authorized to repurchase up to 163 mn  USD in shares of the company's common stock, inclusive of the 13 mn USD remaining under the prior stock repurchase program as of the end of the third quarter this year.
While the company used a majority of the cash flow to reduce debt and plan to continue to do so through the balance of this year, in the third quarter, they also used 46 mn USD to repurchase 4.3 million shares of stock at an average price of $10.77.

Despite this rally, the stock trades at 6.8x FY22 PE and 5.3x EV-EBITDA conservatively on our numbers. Given the stability in cashflows over the medium-term, we believe the stock will rerate to an 8-9x multiple from here.

Graftech, Solid Results + Bullish Guidance in Q3 2021