October 5, 2017 Price $13.52^ Ferroglobe Preliminary US Si ... · PDF fileUS DOC Imposes...
14
USD Prev. 2015A Prev. 2016A Prev. 2017E Prev. 2018E Rev. (MM) -- 2,040.0 -- 1,581.0 -- 1,713.0 -- 2,003.0 EBITDA (MM) -- 295.0 -- 73.0 -- 159.0 -- 358.0 Cons. EPS -- -- -- -- -- 0.09 -- 0.86 EPS Mar -- -- -- (0.04) -- (0.03)A -- -- Jun -- -- -- (0.01) -- 0.05A -- -- Sep -- -- -- (0.09) -- 0.01 -- -- Dec -- -- -- (0.09) -- 0.02 -- -- FY Dec -- 0.21 -- (0.24) -- 0.04 -- 0.70 FY P/E 64.4x NM NM 19.3x Price Performance OCT-16 FEB-17 JUN-17 OCT-17 16 14 12 10 8 ^Prior trading day's closing price unless otherwise noted. COMPANY NOTE Company Update USA | Industrials | Materials (Steel) October 5, 2017 Ferroglobe (GSM) US Levies 4-135% Preliminary Si Metal Antidumping Duties; Reiterate Buy EQUITY RESEARCH AMERICAS BUY Price target $16.75 Price $13.52^ Financial Summary Book Value (MM): $906.5 Book Value/Share: $5.27 Net Debt (MM): $433.6 Return on Avg. Equity: (0.9)% Net Debt/Capital: 28.5% Long-Term Debt (MM): $590.1 LTD/Cap: 38.7% Cash & ST Invest. (MM): $183.6 Market Data 52 Week Range: $14.46 - $8.54 Total Entprs. Value (MM): $2,756.3 Market Cap. (MM): $2,322.7 Insider Ownership: 58.8% Institutional Ownership: 41.3% Shares Out. (MM): 171.8 Float (MM): 70.7 Avg. Daily Vol.: 658,383 Martin Englert * Equity Analyst (646) 805-5421 [email protected] Seth Rosenfeld, CFA § Equity Analyst +44 (0) 20 7029 8772 [email protected] Alan Spence, CFA § Equity Analyst +44 (0) 20 7029 8311 [email protected] * Jefferies LLC § Jefferies International Limited Key Takeaway The imposition of US Si metal import duties of 4-135% is a positive catalyst for GSM with shares likely moving higher on the open tomorrow. Duties will ultimately result in upward price pressure on Si due to supply-side constraints as ~28% of supply is stripped from the US market, however, this response may be temporarily delayed due to recent hiccups in the US supply-demand balance. We reiterate our Buy and $16.75 target price on the shares of GSM. Si Duties a Positive Catalyst for GSM & US Market: The implementation of US Si metal import duties will act to further constrain supply and likely lead to higher pricing, but near term headwinds may delay the response. We note July Si imports jumped +43% MoM, likely the result of importers under review of the pending trade cases attempting to move material before the floodgates closed. As a result of increased supply, it could cap more immediate upward moves in spot Si prices. Further, Wacker’s poly facility outage and REC’s idling (China"s Silicon Retracement Trajectory Moderating with Signs of Stabilization ) likely translates to a short-lived stepdown in demand during 4Q. Despite these near-term headwinds, post preliminary duties, we remain positive on Western Si pricing fundamentals reiterating our Buy on GSM shares. US DOC Imposes Preliminary Si AD Duties: On October 4, 2017, the US Department of Commerce (DOC) imposed preliminary Si metal import antidumping (AD) duties of; 57-135% against Brazil (~21% US consumption TTM July ‘17), Australia of 21% (~7%) and Norway of 4% (~4%). Preliminary AD duties of 57-135% against the leading import source, Brazil, were higher and broader than we expected hitting Dow's facilities in addition to the more critical merchant market. A detailed timeline and table of AD/CV preliminary duties is provided on page 4, exhibit 3. Recent Research: Preliminary US Si Dumping Duties Expected Tomorrow; Canada Executes No Sugarcoating; China Silicon Inflects & Europe Plays Catch-Up Global Upsurge of Silicon Prices Gains Breadth as Euro Prices Move Leverage to Price Apparent; Setting the Stage for 2018; Maintain Buy Valuation/Risks Valuation: GSM trades at 7.5x 2018E EV/EBITDA versus its historical 8.8x median (5-13x range) and the US steel sector at 6.3x. Our $16.75 PT implies 9.0x 2018E EV/EBITDA. Risks: a) Si metals pricing, b) capacity additions, & c) FX. Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 10 to 14 of this report.
Transcript of October 5, 2017 Price $13.52^ Ferroglobe Preliminary US Si ... · PDF fileUS DOC Imposes...
USD Prev. 2015A Prev. 2016A Prev. 2017E Prev. 2018E
Rev. (MM) -- 2,040.0 -- 1,581.0 -- 1,713.0 -- 2,003.0
EBITDA (MM) -- 295.0 -- 73.0 -- 159.0 -- 358.0
Cons. EPS -- -- -- -- -- 0.09 -- 0.86
EPS
Mar -- -- -- (0.04) -- (0.03)A -- --
Jun -- -- -- (0.01) -- 0.05A -- --
Sep -- -- -- (0.09) -- 0.01 -- --
Dec -- -- -- (0.09) -- 0.02 -- --
FY Dec -- 0.21 -- (0.24) -- 0.04 -- 0.70
FY P/E 64.4x NM NM 19.3x
Price Performance
OCT-16 FEB-17 JUN-17 OCT-17
16
14
12
10
8
^Prior trading day's closing price unlessotherwise noted.
COMPANY NOTE
Company Update
USA | Industrials | Materials (Steel) October 5, 2017
Ferroglobe (GSM)US Levies 4-135% Preliminary Si MetalAntidumping Duties; Reiterate Buy
EQU
ITY R
ESEARC
H A
MERIC
AS
BUYPrice target $16.75
Price $13.52^
Financial SummaryBook Value (MM): $906.5Book Value/Share: $5.27Net Debt (MM): $433.6Return on Avg. Equity: (0.9)%Net Debt/Capital: 28.5%Long-Term Debt (MM): $590.1LTD/Cap: 38.7%Cash & ST Invest. (MM): $183.6
Market Data52 Week Range: $14.46 - $8.54Total Entprs. Value (MM): $2,756.3Market Cap. (MM): $2,322.7Insider Ownership: 58.8%Institutional Ownership: 41.3%Shares Out. (MM): 171.8Float (MM): 70.7Avg. Daily Vol.: 658,383
Martin Englert *Equity Analyst
(646) 805-5421 [email protected] Rosenfeld, CFA §
Equity Analyst+44 (0) 20 7029 8772 [email protected]
Alan Spence, CFA §Equity Analyst
+44 (0) 20 7029 8311 [email protected]
* Jefferies LLC § Jefferies International Limited
Key TakeawayThe imposition of US Si metal import duties of 4-135% is a positive catalystfor GSM with shares likely moving higher on the open tomorrow. Duties willultimately result in upward price pressure on Si due to supply-side constraintsas ~28% of supply is stripped from the US market, however, this response maybe temporarily delayed due to recent hiccups in the US supply-demand balance.We reiterate our Buy and $16.75 target price on the shares of GSM.
Si Duties a Positive Catalyst for GSM & US Market: The implementation of US Simetal import duties will act to further constrain supply and likely lead to higher pricing,but near term headwinds may delay the response. We note July Si imports jumped +43%MoM, likely the result of importers under review of the pending trade cases attempting tomove material before the floodgates closed. As a result of increased supply, it could capmore immediate upward moves in spot Si prices. Further, Wacker’s poly facility outage andREC’s idling (China"s Silicon Retracement Trajectory Moderating with Signs of Stabilization)likely translates to a short-lived stepdown in demand during 4Q. Despite these near-termheadwinds, post preliminary duties, we remain positive on Western Si pricing fundamentalsreiterating our Buy on GSM shares.
US DOC Imposes Preliminary Si AD Duties: On October 4, 2017, the US Departmentof Commerce (DOC) imposed preliminary Si metal import antidumping (AD) duties of;57-135% against Brazil (~21% US consumption TTM July ‘17), Australia of 21% (~7%) andNorway of 4% (~4%). Preliminary AD duties of 57-135% against the leading import source,Brazil, were higher and broader than we expected hitting Dow's facilities in addition to themore critical merchant market. A detailed timeline and table of AD/CV preliminary duties isprovided on page 4, exhibit 3.
Recent Research:Preliminary US Si Dumping Duties Expected Tomorrow; Canada ExecutesNo Sugarcoating; China Silicon Inflects & Europe Plays Catch-UpGlobal Upsurge of Silicon Prices Gains Breadth as Euro Prices MoveLeverage to Price Apparent; Setting the Stage for 2018; Maintain Buy
Valuation/RisksValuation: GSM trades at 7.5x 2018E EV/EBITDA versus its historical 8.8x median (5-13xrange) and the US steel sector at 6.3x. Our $16.75 PT implies 9.0x 2018E EV/EBITDA.
Risks: a) Si metals pricing, b) capacity additions, & c) FX.
Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 10 to 14 of this report.
Contents US Silicon Trade ............................................................................................................................ 3 US Silicon Dumping-Subsidy & Timeline ....................................................................................... 4 Canada Silicon Dumping-Subsidy & Timeline................................................................................ 5 Weekly Silicon Metal & Alloy Price Trends ................................................................................... 6 Exchange Rates ............................................................................................................................. 8 Weekly Silicon Metals Price Summary .......................................................................................... 9
GSM
Company Update
October 5, 2017
page 2 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
US Silicon Trade
Exhibit 1: Monthly US Si Metal Imports
Source: US Census
Exhibit 2: Annual US Si Metal Imports
Source: US Census
8.25.0 5.4
8.75.3 4.9 6.4 6.3
4.8 3.55.2
7.4
2.0
1.2 1.2
0.8
1.5 1.90.6
2.32.0
2.91.5
4.1
1.22.7
1.8
0
5
10
15
20
US
Si I
mp
ort
s (,
00
0 t
on
ne
s)
Brazil Australia Kazakhstan Norway Other
50 68 42
74 84 71 62 77 47 62 71
22
12
14
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 TTM
July
17'
US
Si I
mp
ort
s (,
00
0 t
on
ne
s)
Brazil Australia Kazakhstan Norway Other
GSM
Company Update
October 5, 2017
page 3 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
US Silicon Dumping-Subsidy & Timeline
Exhibit 3: US Preliminary Silicon Dumping & Subsidy
Exporter Dumping % Subsidy % Total
Brazil
DC Brazil 56.78% 3.69% 60.47%
LIASA 134.92% 52.07% 186.99%
Rima 56.78% 3.69% 60.47%
Others 56.78% 3.69% 60.47%
Norway
Elkem 3.74% 3.74%
Others 3.74% 3.74%
Australia
Simcoa 20.79% 16.23% 37.02%
Others 20.79% 16.23% 37.02%
Kazakhstan
Tau-Ken Temir LLP 120.00% 120.00%
Others 120.00% 120.00%
Past Events
March 8, 2017 GSM petitions for dumping-subsidy on silicon metal imports
March 29, 2017 US DOC pursues silicon import investigation
April 21, 2017 ITC affirms US industry harmed by silicon imports on preliminary basis
May 16, 2017 DOC postpones preliminary CV to August 7, 2017
July 12, 2017 GSM requests DOC postpone preliminary AD to October 14, 2017
July 27, 2017 DOC grants postponement of preliminary AD to October 4, 2017
August 8, 2017 DOC preliminary CV determination
October 4, 2017 DOC preliminary AD determination
Upcoming Events
December 18, 2017 DOC final CV determination
February 16, 2018 DOC final AD determination
Source: US DOC, Jefferies
GSM
Company Update
October 5, 2017
page 4 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Canada Silicon Dumping-Subsidy & Timeline
Exhibit 4: Canada Silicon Dumping & Subsidy
Exporter Dumping % Subsidy % Total
Brazil
Ligas de Aluminio S.A. 27.8% 7.2% 35.0%
Polymet Alloys Inc. (USA) 27.8% 2.8% 30.6%
Rima Industrial S.A. 0.0% 2.7% 2.7%
All other exporters in Brazil 27.8% 6.0% 33.8%
Kazakhstan
Tau-Ken Temir 18.2% 40.3% 58.5%
All other exporters in Kazakhstan 86.5% 269.7% 356.2%
Laos
All exporters in Laos 85.2% 85.2%
Malaysia
All exporters in Malaysia 85.2% 10.6% 95.8%
Norway
Elkem AS 1.2% 2.8% 4.0%
Russia 0.0% 0.0% 0.0%
Thailand
Sica New Materials Co., Ltd. 51.0% 0.8% 51.8%
All other exporters in Thailand 85.2% 0.5% 85.7%
Past Events
February 21, 2017 CBSA launches investigations into silicon metal imports
April 21, 2017 CBSA injury affirmed in preliminary determination
May 18, 2017 CBSA extends preliminary duty determination
July 5, 2017 CBSA preliminary dumping & subsidy rates
October 3, 2017 (by) CBSA final dumping + subsidy margin determination
Upcoming Events
November 2, 2017 (by) Canadian International Trade Tribunal injury determination
Note: <2% dumping and <1% subsidy are determined to be insignificant.
Source: Jefferies, CBSA
GSM
Company Update
October 5, 2017
page 5 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Weekly Silicon Metal & Alloy Price Trends
Exhibit 5: Silicon Metal Weekly Price Trends
Source: Jefferies derived estimates (AMM, CRU, MB, and MP)
Exhibit 6: Ferrosilicon 75% Weekly Price Trends
Source: Jefferies derived estimates (AMM, CRU, MB, and MP)
Exhibit 7: Silicomanganese 65% Weekly Price Trends
Source: Jefferies derived estimates (AMM, CRU, MB, and MP)
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$/
lb
US $/lb EU $/lb China $/lb
$0.40
$0.45
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
$0.80
$0.85
$/
lb
US $/lb EU $/lb China $/lb
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$/
lb
US $/lb EU $/lb China $/lb
GSM
Company Update
October 5, 2017
page 6 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Exhibit 8: Manganese Ore (44%) CFR China Weekly Price Trends
Source: Jefferies derived estimates (AMM, CRU, MB, and MP)
Exhibit 9: Iron Unit Inputs for FeSi Weekly Price Trends
Source: Jefferies derived estimates & MB
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$/
dm
tu
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$/
lb
Mill Scale $/lb Turnings $/lb
GSM
Company Update
October 5, 2017
page 7 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Exchange Rates
Exhibit 10: USD/EUR
Source: Factset
Exhibit 11: USD/BRL
Source: Factset
Exhibit 12: USD/CHN
Source: Factset
Exhibit 13: USD/RUB
Source: Factset
Exhibit 14: USD/ZAR
Source: Factset
Exhibit 15: USD/NOK
Source: Factset
0.80 €
0.82 €
0.84 €
0.86 €
0.88 €
0.90 €
0.92 €
0.94 €
0.96 €
0.98 €
US
D/
EU
R
R$ 2.0
R$ 2.5
R$ 3.0
R$ 3.5
R$ 4.0
R$ 4.5
US
D/
BR
L
¥6.00
¥6.20
¥6.40
¥6.60
¥6.80
¥7.00
¥7.20
US
D/
CN
H
40 ₽
45 ₽
50 ₽
55 ₽
60 ₽
65 ₽
70 ₽
75 ₽
80 ₽
85 ₽
US
D/
RU
B
R 10
R 11
R 12
R 13
R 14
R 15
R 16
R 17
R 18
US
D/
ZA
R
kr 7.0
kr 7.2
kr 7.4
kr 7.6
kr 7.8
kr 8.0
kr 8.2
kr 8.4
kr 8.6
kr 8.8
kr 9.0
US
D/
NO
K
GSM
Company Update
October 5, 2017
page 8 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Weekly Silicon Metals Price Summary
Exhibit 16: Silicon Metals & Alloys Weekly Pricing
Source: Jefferies derived estimates (AMM, CRU, MB, and MP)
Si Metal & Alloys Price Summary
Product Date
Si Metal (98.5%) 09/29/17 1-week 4-weeks 8-weeks 52-weeks 1-week 4-weeks 8-weeks 52-weeks
US $/lb 1.257 0.000 0.01 0.07 0.37 1.26 1.24 1.18 0.89
EU $/lb 1.166 0.021 0.15 0.18 0.36 1.14 1.02 0.99 0.81
EU €/lb 0.989 0.031 0.13 0.15 0.27 0.96 0.86 0.84 0.72
China $/lb 0.847 (0.023) (0.14) 0.10 0.20 0.87 0.98 0.75 0.65
FeSi (75%) 09/29/17 1-week 4-weeks 8-weeks 52-weeks 1-week 4-weeks 8-weeks 52-weeks
US $/lb 0.753 (0.009) 0.03 0.14 0.23 0.76 0.72 0.61 0.52
EU $/lb 0.771 (0.005) 0.04 0.13 0.29 0.78 0.73 0.65 0.48
EU €/lb 0.654 0.005 0.04 0.11 0.22 0.65 0.62 0.55 0.43
China $/lb 0.611 (0.026) (0.15) 0.04 0.13 0.64 0.76 0.57 0.49
SiMn (65%) 09/29/17 1-week 4-weeks 8-weeks 52-weeks 1-week 4-weeks 8-weeks 52-weeks
US $/lb 0.630 0.000 (0.00) 0.01 0.14 0.63 0.63 0.62 0.49
EU $/lb 0.572 (0.009) 0.01 0.02 0.19 0.58 0.56 0.55 0.38
EU €/lb 0.486 (0.001) 0.01 0.02 0.15 0.49 0.47 0.47 0.34
China $/lb 0.635 (0.007) 0.02 0.05 0.01 0.64 0.61 0.58 0.62
Input Materials 09/29/17 1-week 4-weeks 8-weeks 52-weeks 1-week 4-weeks 8-weeks 52-weeks
Mn Ore (44%) $/dmtu 6.465 0.031 0.35 0.39 1.42 6.43 6.12 6.08 5.05
Mn Ore (100%) $/lb 0.293 0.001 0.02 0.02 0.06 0.29 0.28 0.28 0.23
Mill Scale $/lb 0.025 0.000 (0.00) (0.00) 0.00 0.02 0.03 0.03 0.02
Turnings $/lb 0.083 0.000 (0.00) (0.00) 0.02 0.08 0.09 0.09 0.06
Exchange Rates 09/29/17 1-week 4-weeks 8-weeks 52-weeks 1-week 4-weeks 8-weeks 52-weeks
USD/EUR 0.85 0.01 0.01 (0.00) (0.04) 0.84 0.84 0.85 0.89
USD/CNH 6.65 0.07 0.09 (0.08) (0.02) 6.58 6.56 6.74 6.68
USD/BRL 3.18 0.06 0.04 0.05 (0.08) 3.13 3.14 3.13 3.26
USD/RUB 57.86 0.32 0.36 (2.11) (5.02) 57.53 57.50 59.97 62.87
USD/AUD 1.27 0.02 0.02 0.01 (0.03) 1.26 1.25 1.26 1.31
USD/ZAR 13.52 0.27 0.58 0.09 (0.21) 13.25 12.94 13.42 13.73
USD/NOK 7.94 0.14 0.14 (0.04) (0.04) 7.80 7.80 7.98 7.98
Net Change
Friday, September 29, 2017
Price Level Weeks Prior
GSM
Company Update
October 5, 2017
page 9 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Company DescriptionFerroglobe (NASDAQ ticker GSM), headquartered in London, UK, is a global specialty metals producer brought about from the merger ofGlobe and FerroAtlántica towards the end of 2015. The company produces silicon metal as well as other silicon based alloys with a significantmanufacturing footprint in both North America and Europe. The Globe operations consist of 11 production facilities and three mining sites insix countries with nearly 90% of revenue stemming from the North American market. The FerroAtlántica operations consist of 15 productionfacilities and five mining operations in five countries as well as hydroelectric power assets in Spain and France with the majority of revenuestemming from the European market. GSM maintains a partially vertically integrated model which owns hydro power, specialty coal, quartz,charcoal, woodchips, gravel and electrodes, all key inputs for silicon/silicon based metal manufacturing. Its products service customers withinthe chemicals, aluminum, solar, steel and iron industries.
Analyst Certification:I, Martin Englert, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Seth Rosenfeld, CFA, certify that all of the views expressed in this research report accurately reflect my personal views about the subjectsecurity(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this research report.I, Alan Spence, CFA, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.Registration of non-US analysts: Seth Rosenfeld, CFA is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and tradingsecurities held by a research analyst.Registration of non-US analysts: Alan Spence, CFA is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and tradingsecurities held by a research analyst.As is the case with all Jefferies employees, the analyst(s) responsible for the coverage of the financial instruments discussed in this report receivescompensation based in part on the overall performance of the firm, including investment banking income. We seek to update our research asappropriate, but various regulations may prevent us from doing so. Aside from certain industry reports published on a periodic basis, the large majorityof reports are published at irregular intervals as appropriate in the analyst's judgement.
Investment Recommendation Record(Article 3(1)e and Article 7 of MAR)
Recommendation Published , 19:22 ET. October 5, 2017Recommendation Distributed , 19:22 ET. October 5, 2017
Company Specific DisclosuresJefferies Group LLC makes a market in the securities or ADRs of Ferroglobe.
Explanation of Jefferies RatingsBuy - Describes securities that we expect to provide a total return (price appreciation plus yield) of 15% or more within a 12-month period.Hold - Describes securities that we expect to provide a total return (price appreciation plus yield) of plus 15% or minus 10% within a 12-month period.Underperform - Describes securities that we expect to provide a total return (price appreciation plus yield) of minus 10% or less within a 12-monthperiod.The expected total return (price appreciation plus yield) for Buy rated securities with an average security price consistently below $10 is 20% or morewithin a 12-month period as these companies are typically more volatile than the overall stock market. For Hold rated securities with an averagesecurity price consistently below $10, the expected total return (price appreciation plus yield) is plus or minus 20% within a 12-month period. ForUnderperform rated securities with an average security price consistently below $10, the expected total return (price appreciation plus yield) is minus20% or less within a 12-month period.NR - The investment rating and price target have been temporarily suspended. Such suspensions are in compliance with applicable regulations and/or Jefferies policies.CS - Coverage Suspended. Jefferies has suspended coverage of this company.NC - Not covered. Jefferies does not cover this company.Restricted - Describes issuers where, in conjunction with Jefferies engagement in certain transactions, company policy or applicable securitiesregulations prohibit certain types of communications, including investment recommendations.
GSM
Company Update
October 5, 2017
page 10 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
Monitor - Describes securities whose company fundamentals and financials are being monitored, and for which no financial projections or opinionson the investment merits of the company are provided.
Valuation MethodologyJefferies' methodology for assigning ratings may include the following: market capitalization, maturity, growth/value, volatility and expected totalreturn over the next 12 months. The price targets are based on several methodologies, which may include, but are not restricted to, analyses of marketrisk, growth rate, revenue stream, discounted cash flow (DCF), EBITDA, EPS, cash flow (CF), free cash flow (FCF), EV/EBITDA, P/E, PE/growth, P/CF,P/FCF, premium (discount)/average group EV/EBITDA, premium (discount)/average group P/E, sum of the parts, net asset value, dividend returns,and return on equity (ROE) over the next 12 months.
Jefferies Franchise PicksJefferies Franchise Picks include stock selections from among the best stock ideas from our equity analysts over a 12 month period. Stock selectionis based on fundamental analysis and may take into account other factors such as analyst conviction, differentiated analysis, a favorable risk/rewardratio and investment themes that Jefferies analysts are recommending. Jefferies Franchise Picks will include only Buy rated stocks and the numbercan vary depending on analyst recommendations for inclusion. Stocks will be added as new opportunities arise and removed when the reason forinclusion changes, the stock has met its desired return, if it is no longer rated Buy and/or if it triggers a stop loss. Stocks having 120 day volatility inthe bottom quartile of S&P stocks will continue to have a 15% stop loss, and the remainder will have a 20% stop. Franchise Picks are not intendedto represent a recommended portfolio of stocks and is not sector based, but we may note where we believe a Pick falls within an investment stylesuch as growth or value.
Risks which may impede the achievement of our Price TargetThis report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, thefinancial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions basedupon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Past performance ofthe financial instruments recommended in this report should not be taken as an indication or guarantee of future results. The price, value of, andincome from, any of the financial instruments mentioned in this report can rise as well as fall and may be affected by changes in economic, financialand political factors. If a financial instrument is denominated in a currency other than the investor's home currency, a change in exchange rates mayadversely affect the price of, value of, or income derived from the financial instrument described in this report. In addition, investors in securities suchas ADRs, whose values are affected by the currency of the underlying security, effectively assume currency risk.
Other Companies Mentioned in This Report• Ferroglobe (GSM: $13.52, BUY)
Notes: Each box in the Rating and Price Target History chart above represents actions over the past three years in which an analyst initiated on acompany, made a change to a rating or price target of a company or discontinued coverage of a company.Legend:
I: Initiating Coverage
D: Dropped Coverage
B: Buy
GSM
Company Update
October 5, 2017
page 11 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
H: Hold
UP: Underperform
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Distribution of RatingsIB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY 1103 51.33% 336 30.46%HOLD 899 41.83% 180 20.02%UNDERPERFORM 147 6.84% 17 11.56%
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Company Update
October 5, 2017
page 12 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
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GSM
Company Update
October 5, 2017
page 13 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
expressed in the analyst's published research, the analyst has a reasonable basis and any inconsistencies can be reasonably explained. This materialdoes not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individualclients. Clients should consider whether any advice or recommendation in this report is suitable for their particular circumstances and, if appropriate,seek professional advice, including tax advice. The price and value of the investments referred to herein and the income from them may fluctuate. Pastperformance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchangerates could have adverse effects on the value or price of, or income derived from, certain investments. This report has been prepared independently ofany issuer of securities mentioned herein and not in connection with any proposed offering of securities or as agent of any issuer of securities. Noneof Jefferies, any of its affiliates or its research analysts has any authority whatsoever to make any representations or warranty on behalf of the issuer(s).Jefferies policy prohibits research personnel from disclosing a recommendation, investment rating, or investment thesis for review by an issuer priorto the publication of a research report containing such rating, recommendation or investment thesis. Any comments or statements made herein arethose of the author(s) and may differ from the views of Jefferies.
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GSM
Company Update
October 5, 2017
page 14 of 14 , Equity Analyst, (646) 805-5421, [email protected] Englert
Please see important disclosure information on pages 10 - 14 of this report.
