[Click eStock] "SeAH Besteel Holdings, New Business Sales Must Begin... Target Price Down"

Target Price Lowered from 24,000 KRW to 23,000 KRW

Shinhan Investment Corp. lowered the target price for SeAH Besteel Holdings from 24,000 KRW to 23,000 KRW on the 31st, citing the need for meaningful sales from new businesses. The investment rating was maintained at 'Buy.'

Park Kwang-rae, a researcher at Shinhan Investment Corp., explained, "The target price was lowered to reflect changes in earnings estimates," adding, "Through the 2024 value-up announcement, a price-to-book ratio (PBR) of 0.7 was set as a mid-to-long-term goal. Considering the valuations of domestic steel companies, for the stock price to be re-evaluated up to 0.7 times, meaningful sales achievements in new businesses must begin."

First-quarter earnings this year are expected to fall short of market expectations. Researcher Park said, "Operating profit for the first quarter is expected to be 18.3 billion KRW, below the market expectation of 26.2 billion KRW," and added, "Unlike the fourth quarter of last year, which saw poor performance due to inventory valuation losses and one-time labor-related costs, a profit is expected this time. However, compared to the same period last year, the profit decline trend will continue for six consecutive quarters."

Sales volume is showing signs of recovery. Park said, "SeAH Besteel's monthly sales dropped to 120,000 to 130,000 tons in the fourth quarter of last year but are estimated to have recovered to around 140,000 tons per month in the first quarter," adding, "Changwon Special Steel's sales, which averaged in the low 40,000 tons per month in the fourth quarter, are expected to recover to the mid-40,000 tons range this quarter." Due to sluggish demand in downstream industries and a worsening sales mix, the average selling price (ASP) is expected to decline by 6.8% for SeAH Besteel and 9.8% for Changwon Special Steel compared to the previous quarter.

Shinhan Investment Corp. forecasts SeAH Besteel Holdings' annual performance this year with sales increasing by 1.0% year-on-year to 3.7 trillion KRW and operating profit rising 129.4% to 120.1 billion KRW. Researcher Park noted, "The high dividend attractiveness supports the downside of the stock price," adding, "Based on the 2024 dividend per share (DPS), the expected dividend yield is 6.7%, and based on the minimum dividend (1,000 KRW), it will reach 5.5%."

Expectations for new businesses are likely to be reflected in the stock price from the second half of this year. Park said, "Sales from new businesses such as the dry storage cask (CASK) for spent nuclear fuel, Saudi Arabia's non-alloy steel pipes, and the U.S. special alloy business (SST) will begin in 2026," adding, "From the second half of this year, related expectations may be reflected in the stock price."

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