[Click eStock] Dongyang Steel Pipe, Full-Scale Earnings Improvement Begins... US-Bound Steel Pipe Export Prices Rise

[Asia Economy Reporter Hyungsoo Park] Research Alom estimated on the 19th that Dongyang Steel Pipe's performance will significantly improve. A new target price of 2,200 KRW was presented.

Dongyang Steel Pipe's main business is in the steel pipe sector, including gas pipes, steel pipe piles, and various pipelines. Through its subsidiary KBIR Alloy, it produces and sells special alloys.

Lee Donghyun, Senior Researcher at Research Alom, explained, "Dongyang Steel Pipe announced on the 30th of last month its largest-ever order to supply 60,000 tons of steel pipe piles to Doosan Heavy Industries," adding, "This is a project worth 610 billion KRW, and sales recognition of over 75 billion KRW is expected over the next year."

He continued, "This will be reflected in the performance starting in the second half of this year," and added, "Sales are expected to grow."

With the full-scale launch of public infrastructure (SOC) project orders, domestic civil engineering orders in the first quarter increased by 48.6% year-on-year, and benefits from the increase in civil engineering orders are also expected.

The researcher analyzed, "This year's SOC budget increased by 3.3 trillion KRW compared to last year, and local governments are providing subsidies for replacing old rubber hoses with metal pipes." Furthermore, he emphasized, "Dongyang Steel Pipe manufactures double-insulated pipes used for heat transport pipes," and "It has references for supplying hot water pipes to district heating corporations, so benefits are expected."

He said, "From the second half of the year, price increases for domestic steel pipe products such as structural pipes and piping materials are occurring, reflecting the rise in raw material prices," and added, "Demand for steel pipe products is also solid, so an expansion of the domestic product spread is expected in the third quarter."

He continued, "Not only the price of thick plates but also the price of hot-rolled coils in the U.S. has been continuously reaching record highs from March this year to the present," and said, "The export price of steel pipes to the U.S. is expected to continue rising in the third quarter." He expected that both external growth and profitability improvement will occur simultaneously due to tariff rate reductions.

The researcher said, "Expectations for the South-North-Russia PNG gas pipeline project are growing," explaining, "Currently, Korea relies 100% on LNG distributed by ships, and imports of PNG, which is about 30% cheaper than LNG, are restricted."

He added, "Even if only 10 bcm of Russian PNG is imported annually, Korea's natural gas import cost would be reduced by 6.2%," and said, "Looking at past PNG pipeline projects, the Russia-China pipeline length is 4,000 km but took less than five years to commercialize."

He said, "The South-North-Russia PNG pipeline length is about 1,200 km, so commercialization is possible within around three years," and expressed expectations, "Among small and medium-sized steel pipe companies, Dongyang Steel Pipe is the company with the most gas pipe orders, so benefits are expected if the PNG project proceeds."

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