[Click eStock] "SeAH Steel, Significant Improvement in Operating Performance... Excessive Undervaluation"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 22nd that it expects a significant improvement in operating performance for SeAH Steel this year, maintaining a buy investment opinion and a target price of 160,000 KRW.

Park Seong-bong, a researcher at Hana Financial Investment, said, "With the recovery of U.S. energy steel pipe exports and the expansion of domestic product spreads, operating performance is expected to improve significantly this year, with a return on equity (ROE) reaching 14.7%. However, the current stock price is excessively undervalued at only 3 times the price-earnings ratio (PER) and 0.4 times the price-to-book ratio (PBR)." He explained that the momentum from offshore wind power orders starting in the second half of next year and the easing of U.S. steel import regulations remains valid.

SeAH Steel's sales in the third quarter of this year are expected to increase by 20.2% year-on-year to 335.7 billion KRW, and operating profit is forecasted to rise by 87.1% to 32.9 billion KRW. Although total steel pipe sales were sluggish due to reduced operating days from summer vacation and Chuseok holidays and decreased LNG sales, exports are expected to record favorable profitability due to sales price increases exceeding raw material price hikes and a sharp rise in domestic prices in the U.S.

Researcher Park said, "There is little difficulty in achieving the annual export quota of 260,000 tons of energy steel pipes to the U.S. this year for SeAH Steel. On the other hand, domestic steel pipe products such as structural pipes and piping materials face growing concerns over price declines due to recent demand slowdown and intensified order competition, but with sales volume recovery from increased operating days, operating profit in the fourth quarter is expected to reach 40.9 billion KRW."