[Click e-Stock] "Dongkuk Steel Expected to Improve Profits in Second Half"

Sangsangin Securities announced on July 29 that, considering the gradual recovery in construction demand expected after next year, there is little doubt about the direction of Dongkuk Steel's future performance. The firm raised its target price from 13,000 won to 15,000 won while maintaining a 'Buy' investment rating.

Dongkuk Steel's operating profit for the second quarter was 29.9 billion won, down 26.1% year-on-year, but it continued to improve compared to the previous quarter. Shipbuilding plate sales reached 2.34 million tons, up 27.2% year-on-year, driven by strong shipbuilding sector performance and preliminary rulings on Chinese hot-rolled steel. Rebar and section steel sales also increased by about 25% quarter-on-quarter as the market entered its seasonal peak.

Kim Jinbeom, a research analyst at Sangsangin Securities, stated, "From the fourth quarter, demand for rebar and section steel is expected to recover gradually due to increased social overhead capital (SOC) investment and stimulus measures." However, he added, "Despite the peak season for construction demand and domestic rebar producers' production cuts, there has been no improvement in rebar spreads, so we maintain a conservative view on the extent of profitability recovery for section steel in the second half." Nevertheless, the potential for profit improvement due to higher shipbuilding plate contract prices in the second half was highlighted as a clear positive factor.

Operating profit is expected to recover slightly in the second half compared to the first half. Kim noted, "In particular, the positive impact on profits from the recovery in shipbuilding plate prices and spreads in the second quarter has been demonstrated," adding, "This provides additional upside potential, as it could offset profit deterioration stemming from uncertainty in rebar demand in the second half."

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