[Click eStock] "Hyundai Steel, Attractive Valuation but in a Breather Phase"

[Asia Economy Reporter Kwon Jae-hee] Meritz Securities on the 30th issued a 'Buy' investment rating and a target price of 67,000 KRW for Hyundai Steel.

Meritz Securities forecasted that Hyundai Steel's operating profit for the first quarter of this year will reach 700.3 billion KRW, exceeding the market consensus of 625.2 billion KRW. Although the spread for both flat products and long products is expected to decline by 7.8% and 5.8% respectively due to raw material price increases, the rise in long product prices and recovery in sales volume are expected to mitigate the profit decline.

Moon Kyung-won, a researcher at Meritz Securities, analyzed, "The impact of the March accident at the Dangjin Steelworks on sales volume is uncertain and represents a risk factor," adding, "The downward profit trend is expected to continue until the third quarter of this year."

The decline in demand for automotive steel sheets due to the Ukraine crisis also adds to the uncertainty. Although expectations of rising European steel prices due to the Ukraine crisis are reflected in stock price movements, the benefits to Asian steelmakers are limited.

Researcher Moon stated, "The negative impact on steel sheet demand is greater due to the Ukraine crisis causing sharp increases in raw material prices such as thermal coal, operational disruptions at Russian plants, and shortages in Russian palladium supply, leading to reduced automobile production."

Automotive steel sheet sales, which maintained a quarterly level of around 1 million tons before COVID-19, have dropped to about 800,000 tons, and recovery within this year is expected to be difficult.

Researcher Moon interpreted, "Valuation attractiveness is positive. Given that stock price trends have been steady despite demand uncertainties such as the Ukraine crisis and the downturn in China's real estate market, a short-term pause in stock price movement is expected."

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