[Click e Stocks] "Hyundai Steel Forecasts Record High Performance This Year"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities maintained its 'Buy' rating and target price of 70,000 KRW for Hyundai Steel on the 29th, expecting the company to record its highest-ever performance this year.

Hyundai Steel's third-quarter results this year exceeded market expectations (consensus). Operating profit in the third quarter surged 2,374% year-on-year to 826.2 billion KRW, marking the highest record for two consecutive quarters. This figure surpassed the consensus of 760 billion KRW. Researcher Jonghyung Lee of Kiwoom Securities analyzed, "Despite sales volume dropping 6% year-on-year to 4.54 million tons due to partner company strikes and off-season effects, profitability greatly improved through aggressive price increases across all products and restructuring of low-profit businesses, resulting in record-high performance."

The combined operating profit of subsidiaries showed a solid performance at 45.6 billion KRW but decreased compared to 61.6 billion KRW in the second quarter. The researcher explained, "It is estimated that the decrease was partly due to reduced overseas SSC (Steel Service Center) performance caused by a decline in automobile production within the group."

Performance improvement is expected to continue in the fourth quarter due to additional price increases for automotive steel sheets supplied to group companies. Hyundai Steel reportedly raised the price of automotive steel sheets for domestic factories by 50,000 KRW per ton in the first half of this year. The researcher said, "Price increases for overseas group factories are certain in the second half, and due to the sharp rise in coking coal prices in the second half, prices for domestic factories may also be further increased in the fourth quarter," adding, "If automotive steel sheet prices for domestic factories rise, performance improvement will continue in the fourth quarter."

Steel prices in China, a decisive variable for stock prices and performance, have continued to weaken in the second half despite steelmakers' strengthened production cuts, due to slowing economic momentum and government concerns over raw material price controls. The researcher predicted, "China's economic momentum is likely to stabilize with the fourth quarter as the bottom this year, and with strong steel production regulations expected around the Beijing Winter Olympics in February next year, Chinese steel prices will attempt a rebound around the end of this year to early next year."

Kiwoom Securities forecast Hyundai Steel's annual operating profit this year to reach 2.53 trillion KRW, significantly surpassing the previous record high of 1.49 trillion KRW in 2014. The researcher said, "Despite record-breaking performance, due to concerns over industry peak-out, Hyundai Steel's current price-to-earnings ratio (PER) is only 3.6 times and price-to-book ratio (PBR) is 0.33 times, so when Chinese steel prices rebound, the stock price is expected to show the most elastic rise within the industry."

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