[Click eStock] "Daehan Steel, Despite Strong Earnings Streak, Stock Price Severely Undervalued"

[Asia Economy Reporter Ji-hwan Park] Kiwoom Securities evaluated that despite continued strong performance, the stock price of Daehan Steel is in an excessively undervalued phase.

Jong-hyung Lee, a researcher at Kiwoom Securities, said, "The operating profit for the third quarter was 66.1 billion KRW, continuing a record-breaking performance despite adverse conditions such as the suspension of the second rolling operation at its subsidiary YK Steel on the 10th, supported by the favorable domestic rebar market." Although the rebar market in the fourth quarter is showing a pause, it is expected that differentiated profitability compared to the past will continue into next year.

The domestic rebar market in the fourth quarter is analyzed to be undergoing a healthy correction due to fatigue from the sharp price increases up to the third quarter and the burden of falling Chinese steel prices amid highlighted real estate risks. Researcher Lee said, "Although the pause will continue until the first quarter, which is a seasonal low, the strong demand for rebar due to the domestic apartment sales boom and the weakening competitiveness of Chinese rebar following the abolition of China's steel VAT refund in May are expected to structurally establish differentiated profitability compared to before 2021 even after the fourth quarter."

Consolidated operating profit and controlling shareholder net profit for this year are expected to be around 200 billion KRW and 150 billion KRW, respectively, and similar performance levels are forecasted for next year. The researcher stated, "Despite the record-breaking performance levels that were unimaginable in the past, Daehan Steel's current market capitalization is only about 400 billion KRW, resulting in a price-to-earnings ratio (PER) of less than 3 times, indicating an excessively undervalued phase."

He added, "Although recent weakness in Chinese steel prices and concerns about a peak in performance are suppressing the stock price, it is judged that the stock price can quickly regain upward momentum around the time of a rebound in Chinese steel prices."

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