[Click eStock] "Hyundai Steel Enters Full-Scale Profit Improvement Phase"

Despite Factory Shutdown Issues in Q2, Strong Operating Performance Expected

[Asia Economy Reporter Park Jihwan] Hana Financial Investment maintained a 'Buy' rating and a target price of 78,000 KRW for Hyundai Steel on the 18th, stating that the company has entered a full-scale profit improvement phase.

Park Seongbong, a researcher at Hana Financial Investment, said, "Despite the factory shutdown issue in the second quarter, solid operating results are expected," and predicted that Hyundai Steel's separate sales and operating profit will increase by 35.1% and 4394.4% year-on-year to 5 trillion KRW and 412 billion KRW, respectively.

Despite the improvement in domestic steel demand, Hyundai Steel was affected by a human accident at the Dangjin plant. Since mid-May, the operation of some hot-rolled and rebar factories has been suspended, resulting in steel product sales expected to fall short of the initial forecast at 5.06 million tons.

However, with a significant expansion in spreads for both plate products and long products, the second-quarter operating profit is analyzed to meet the market expectation of 410.1 billion KRW. For long products, the price of steel scrap is expected to rise by 60,000 KRW per ton, and the average selling price (ASP) is expected to increase by 75,000 KRW per ton. For plate products, reflecting a 50,000 KRW per ton price increase for automotive steel sheets supplied to Hyundai Motor Group, the ASP is expected to rise by 90,000 KRW per ton, while the raw material input cost is expected to be limited to 65,000 KRW per ton.

Researcher Park Seongbong said, "Profitability improvement through price increases is expected to continue until the third quarter, and with the recovery of the domestic construction market, benefits from expanded domestic rebar demand are anticipated until 2022," adding, "On the other hand, the current stock price has a price-to-book ratio (PBR) of only 0.4 times, so the valuation burden is also limited."

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