[Click eStock] Hyundai Steel's Low Valuation... Need for Price Increase

[Asia Economy Reporter Myung-hwan Lee] Yuanta Securities announced on the 28th that it maintains a buy rating and a target price of 67,000 KRW for Hyundai Steel.

Yuanta Securities forecasts the company's operating profit for the first quarter of this year to be 518 billion KRW. Despite the off-season, product sales volume is expected to increase by 5% from the previous quarter to 4.82 million tons due to a low base effect. Initially, the market expected product sales volume to reach around 5 million tons, but it is estimated that some production and sales were disrupted due to a worker fatality accident at the Dangjin plant in March. Hyundai Steel's steel sector subsidiaries are expected to maintain solid operating profits following the previous quarter. Although the overseas Steel Service Centers (SSC) in Russia are presumed to have been affected by the suspension of Hyundai Motor's Russian plant operations, the operating profits of the Asian and American SSCs are expected to improve compared to the previous quarter.

Yuanta Securities' analysis indicates that Hyundai Steel needs to raise its selling prices. Researcher Hyun-soo Lee of Yuanta Securities pointed out, "The prices of iron ore and coking coal have remained strong longer than initially expected due to the Ukraine war and adverse weather conditions in Australia." The strong raw material prices continuing through the fourth quarter of last year and the first quarter of this year have created an environment where price increases are necessary. However, it is also forecasted that raw material prices will decline if the supply and demand situation normalizes.

Lee said, "The steel industry overall is showing low valuations based on expected earnings this year," and diagnosed, "Stabilization of the elevated raw material prices must precede before we can seriously discuss a full-scale improvement in the industry outlook."

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