Hi All
Recently I noticed that Biden has imposed tariffs on China
- Biden to End Tariff Exemption on Synthetic Graphite from China
- Biden hits Chinese electric cars and solar cells with higher tariffs
This made me want to look for some valuable stocks, I looked for Graphite stocks and I found
GrafTech International Ltd (EAF)
I did some research .
Graftech makes graphite electrodes which are used by EAFs to convert electricity into heat to then melt steel.
In August 2015, GrafTech was acquired by Brookfield Asset Management
When graphite electrode prices were at their peak in 2018, Brookfield took GrafTech public again. GrafTech paid out substantial interest that year, and Brookfield, as the majority shareholder, recouped a significant amount of money as a result. However, GrafTech was left with a massive debt burden. About Graphite Electrodes - GrafTech International Ltd (EAF)
The company's stock price is currently at an all-time low 2024/05/31 1.65$
BAD:
- They lost like 40% of their production when their mexican plant went down. Looks like an Indian producer is eating their lunch.
- The suspension at the St. Mary facility affects 105 employees. Among them, 91 people were temporarily laid off and 14 were permanently laid off. The layoff dates are from February 13, 2024 to May 31, 2024.
- Long term agreements rolling off and being replaced with lower spot rates. Prices falling from $9000+ to call it $3500
- CEO turnover, board turnover, instability
- Brookfield's stake in the company fell to 9.09% as it sold down its holdings to 23.3528 million shares . and looks set to continue selling
GOOD:
- Things can't quite look any worse because of the above factors
- Production ramping back up
- Might build another needle coke facility
- Graphite Electrode Growth of 65k Europe, 25k North America.
- EAF is like 1/7 of total production capacity
- They have a strong supply of an input Needle Coke for 1/3+ of their production which their competitors lack.
- Mohnish Pabrai held stocks short-term in 2019 Q2~Q4
- New investors buy stocks in large quantities (Colonial House Capital Ltd , Undavia Nilesh)
- Seadrift Coke LP got approval for a permit to expand its Texas facility that makes a material for electric vehicle batteries. This follows the company's plan from last year to potentially increase production.
- The 2024 q1 financial report indicates that As of March 31, 2024, we had liquidity of $275 million, consisting of cash and cash equivalents of $165 million and $110 million of availability under our revolving credit facility. As of March 31, 2024, we had gross debt( 8) of $950 million and net debt(9) of approximately $785 million. We continue to have adequate liquidity in 2024 to navigate the persistent challenges in the commercial environment.
CONCLUSION:
Biden's China tariffs will help Graftech , I predict that St. Mary, the Mexican facility will return to utilization, and Bookfiled will completely sell its shares. It should be a slow and good growth process. and I checked all the factory’s Google Maps, Glassdoor, and Facebook employees’ reviews of the company. Most of them are very positive comments , I think Graftech has the potential and ability to develop better .
I'm hoping someone can give me some ideas or what I've missed, would be very grateful
REFERENCE:
- Graftech EAF In Play: Activist Investor
- Commissioners show support of potential plant expansion
- GrafTech cites weak market conditions resulting in recent layoffs
- GRAFTECH REPORTS FIRST QUARTER 2024 RESULTS
- Notified by the Texas Commission on Environmental Quality
- Graphite Electrodes: Key to Sustainable Steel - Featuring GrafTech
- 2021/06/08 Mohnish Pabrai
- 2019/11/27 Mohnish Pabrai
Submitted June 01, 2024 at 02:50AM by Secure_Maintenance55 https://ift.tt/OiYXtFI
