[Click eStock] "Hyundai Steel, Positive Atmosphere in 2Q... Challenging Second Half Ahead"

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained its buy rating on Hyundai Steel on the 23rd, expecting strong performance in the second quarter of this year. However, considering concerns over a global economic slowdown and peak-out risks, it lowered the target price from 68,000 KRW to 55,000 KRW.

Hyundai Steel's consolidated sales for the second quarter are forecasted to increase by 35.5% year-on-year to 7.6187 trillion KRW, with operating profit rising 49.9% to 817.2 billion KRW. The operating margin is expected to improve by 1 percentage point to 10.7%. On a separate basis, sales are projected to grow 38.3% to 6.7321 trillion KRW, and operating profit to increase 52.4% to 737 billion KRW.

Researcher Lee Tae-hwan of Daishin Securities explained, "Although this period was expected to feel the burden of rising costs, Hyundai Steel successfully raised prices appropriately in May due to actual demand." He added, "Automotive steel prices will be retroactively applied to some supply volumes from the first quarter, and the related profits will be reflected in this quarter."

He continued, "Due to the Cargo Solidarity strike issue this month, some scheduled shipments are expected to be deferred to the third quarter." He also noted, "The pipe business in the U.S. market continues to experience tight supply conditions due to the Russian import ban, accounting for 5% of sales but showing good margins, with potential for expansion in the North American market."

The outlook for Hyundai Steel in the second half of the year is not very optimistic. The researcher said, "Recently, global steel prices have weakened due to falling raw material prices and concerns over an economic slowdown." He added, "While a recovery in demand industries can be expected, significant price resistance is anticipated." Furthermore, he stated, "The speed and strength of demand recovery in China, where city lockdowns were lifted this month, are key variables for performance forecasts. If Chinese prices rebound, it will serve as a basis for a smooth landing of second-half performance."

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