[Click eStock] "Korea Steel, Q4 Profitability Improvement Expected"

Hana Financial Investment Issues 'Buy' Rating and 6,900 KRW Target Price... Closing Price on 19th at 5,460 KRW

[Asia Economy Reporter Kum Boryeong] Although Korea Steel's third-quarter performance was disappointing, there is an analysis that profitability improvement is expected in the fourth quarter.

According to Hana Financial Investment on the 20th, Korea Steel's third-quarter results showed sales of 148.5 billion KRW and operating profit of 8.9 billion KRW. Compared to the previous year, sales decreased by 15.3%, while operating profit increased by 3.7%. Compared to the previous quarter, sales decreased by 15.3% and operating profit decreased by 33.6%.

Park Seongbong, a researcher at Hana Financial Investment, explained, "Entering the seasonal off-season and the impact of prolonged rainy season and typhoons caused a decrease in rebar sales volume. The rebar selling price remained similar to the previous quarter at 625,000 KRW/t, but overall spread narrowed due to the rise in domestic steel scrap prices, slightly worsening profitability."

However, profitability improvement is expected in the fourth quarter. The fourth quarter is the period entering the seasonal peak. Improvement in domestic housing-related indicators is also anticipated. Hana Financial Investment estimates Korea Steel's rebar sales volume to increase by 9.3% from the previous quarter to 240,000 tons. This increase in sales volume is expected to have a fixed cost reduction effect.

Researcher Park said, "Steelmakers are aggressively raising prices to pass on the steel scrap price, which turned bullish from August. Hyundai Steel announced the October rebar base price at 685,000 KRW/t, an increase of 25,000 KRW/t compared to September, and the distribution price also reflected this, recently rising to 680,000 KRW/t." He added, "Therefore, Korea Steel is expected to see an expanded spread due to the rebar price increase in the fourth quarter, with operating profit forecasted at 12.7 billion KRW."

Hana Financial Investment gave Korea Steel a 'Buy' investment opinion with a target price of 6,900 KRW. The target price was raised from the previous 5,700 KRW. The closing price on the 19th was 5,460 KRW. Researcher Park said, "Since the loss-making forging business division has been closed, it is expected to contribute to profitability improvement from next year."

This content was produced with the assistance of AI translation services.