Ssangyong Cement, Expects Business Conditions to Improve This Year

[Asia Economy Reporter Ji-hwan Park] Hanwha Investment & Securities on the 20th expressed expectations for an improvement in the industry starting this year regarding Ssangyong Cement, recommending a buy rating and setting a target price of 8,000 KRW.

Researcher Yu-rim Song of Hanwha Investment & Securities analyzed, "Ssangyong Cement's consolidated second-quarter sales are expected to be 383.4 billion KRW, down 9.6% year-on-year, and operating profit is expected to be 74.8 billion KRW, down 11.4% year-on-year."

He explained, "Sales decline is understood to have continued due to a significant contraction in cement export volumes caused by the impact of COVID-19, as well as the influence of the ready-mixed concrete strike in the Busan-Gyeongnam region in May."

However, with the continued weakness in thermal coal prices and the smooth operation of the recycling resource processing facility, the damage to profit margins is considered limited.

Researcher Song diagnosed, "Despite the high dividend yield, the sluggish industry conditions are holding back stock price increases. Although the first-quarter operating profit greatly exceeded market expectations, the stock price surged and then returned to its previous level because the ongoing decline in shipment volume has become a factor that burdens not only future earnings estimates but also dividend payments."

He forecasted, "The time is approaching when cement shipment volume will increase due to the rise in apartment pre-sale supply starting last year and the activation trend of SOC projects."

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