[Click eStock] SeAH Besteel's Strong Commitment to Enhancing Shareholder Value

[Asia Economy Reporter Kwon Jae-hee] Hana Financial Investment maintained its investment opinion of 'Buy' and a target price of 31,000 KRW for SeAH Besteel.

SeAH Besteel's standalone sales and operating profit in the fourth quarter of last year increased by 36.9% year-on-year to 565.5 billion KRW. Operating profit was 23.4 billion KRW, higher than the market forecast of 21.7 billion KRW, but overall performance was sluggish.

Although steel scrap prices rose, the spread widened due to an increase in special steel ASP. However, special steel sales volume declined due to disruptions in automobile production caused by semiconductor supply shortages and difficulties securing export vessels due to the global logistics crisis. Prices of raw materials including ferroalloys also surged sharply.

SeAH Changwon Special Steel also saw a decrease in sales volume, resulting in a consolidated operating profit of only 42.3 billion KRW.

The first quarter of this year is expected to continue a similar situation to the fourth quarter of last year. Supply disruptions of automotive semiconductors occurred due to power outages, fires at major semiconductor production plants last year, and shutdowns caused by COVID-19 confirmed cases, which are unlikely to be resolved in the short term.

Meanwhile, with the continued strength in scrap prices this year, SeAH Besteel decided to raise the special steel selling price by 50,000 KRW per ton starting in January, so the spread is expected to slightly widen in the first quarter. Considering this, SeAH Besteel's standalone operating profit for the first quarter is expected to be 26.8 billion KRW.

Park Seong-bong, a researcher at Hana Financial Investment, said, "SeAH Besteel announced a dividend of 1,500 KRW last year, which corresponds to a dividend yield of 7.36%, and the dividend payout ratio based on standalone net profit exceeds 30%," adding, "We maintain a Buy rating due to a strong commitment to enhancing shareholder value."