I conservatively think we own this business at 11-16% FCF yield and presume no new long-term contracts are signed. That should lead to higher top-line prices and healthy margins for EAF. Their competitors DO NOT have control of their input costs…this advantage will become more pronounced as pet needle coke becomes scarcer as EV production ramps up. Recall our earlier discussion on scarcity. I will concede that historical margins are unlikely to be repeated but it seems likely new LTA's will be signed. Bears are concerned that as the business shifts to the spot market, the margins will decline. Another area of concern are long-term-agreements (LTA's) which are starting to roll off. The market is worried about recession which could result in some short-term pain to the industry. They can guarantee their product as they know 2/3 of their capacity can be covered by Seadrift. Their product helps steelmakers emit less greenhouse gases which helps drive the topline. Owning your own input commodity is a strategic advantage as others cannot guarantee production nor guarantee a profit on an order.ĮAF is in a unique position. Pet-needle coke is increasingly going to be in short supply as it is an important input commodity for electric vehicle battery production. EAF can self-source their main input, pet-needle coke, through their Seadrift subsidiary. EAF benefits from a global push to decarbonize steelmaking which is driving new capacity in electric arc steelmaking. The electrodes are necessary to produce electric arc furnace steel, a more environmental process than blast furnace production. " GrafTech manufactures graphite electrodes in North America and Europe. (NYSE:EAF) in its Q2 2022 investor letter: Here is what Black Bear Value Fund has to say about GrafTech International Ltd. The stock closed at $7.62 per share on July 21, 2022. (NYSE:EAF) delivered a -35.59% return since the beginning of the year, while its 12-month returns are down by -28.38%. (NYSE:EAF) is a Brooklyn Heights, Ohio-based carbon and graphite product manufacturing company with a $1.9 billion market capitalization. Founded in 1886, GrafTech International Ltd. (NYSE: EAF ) and explained its insights for the company. In its Q2 2022 investor letter, Black Bear Value Fund mentioned GrafTech International Ltd. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022. If a downturn is going to impair a business permanently, it’s typically not a fit for this Fund. The Black Bear Value Fund, LP (the “Fund”) returned –6.7% in June and –2.7% YTD. Black Bear Value Partners, an investment management firm, published its “Black Bear Value Fund” second-quarter 2022 investor letter – a copy of which can be downloaded here.
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