[Click eStock] "Hyundai Steel, China's steel demand in the second half expected to be moderate"... Target price lowered

Hyundai Motor Securities maintained a buy rating on Hyundai Steel on the 11th, expecting that steel demand in China will be quite moderate but improve in the second half of this year, while lowering the target price from the previous 50,000 won to 48,000 won.

Hyundai Steel's standalone sales for the second quarter are expected to be 5.877 trillion won, operating profit 408 billion won, and pre-tax profit 335 billion won, with operating profit forecasted to decrease by 49% compared to the same period last year. On a consolidated basis, operating profit is projected to decline by 46% to 445 billion won.

The forecast was revised upward from previous estimates due to the plate segment's selling price being higher than initially expected, which likely expanded the spread after deducting raw material costs. In contrast, the spread for long products, especially rebar, is estimated to have slightly contracted due to weak demand even during the peak season.

Researcher Park Hyun-wook of Hyundai Motor Securities explained, "Steel prices in China showed a correction entering the second quarter, but have been confirming a bottom since June," adding, "This is attributed to the significantly low profit margins of Chinese steelmakers and the production cuts that began in May."

He continued, "However, for steel prices to rebound, demand stimulation is necessary, but Hyundai Steel maintains a conservative stance regarding the possibility of aggressive economic stimulus policies in China," and "We expect an improvement in steel demand for real estate in the second half of the year at a baseline effect level."

Additionally, Researcher Park judged that the downside risk to the stock price is limited as Chinese steel prices, which have a strong correlation with the stock price, are confirming a bottom. Although momentum in the steel sector in the second half is not expected to be significant, a gradual improvement in the industry is anticipated to enhance investment sentiment in the medium term.

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