[Click eStock] "Hyundai Steel Expected to Return to Profit in 1Q"

[Asia Economy Reporter Hwang Yoon-joo] Hyundai Motor Securities evaluated that Hyundai Steel's performance in the fourth quarter of last year was at its lowest point on the 31st. Accordingly, they maintained a 'Buy' investment rating and a target price of 43,000 KRW.

Researcher Park Hyun-wook of Hyundai Motor Securities stated, "The separate basis operating loss in the fourth quarter was 293.4 billion KRW, and the consolidated operating loss was 275.9 billion KRW, falling short of consensus."

Researcher Park judged that the poor performance in the fourth quarter of 2022 was due to one-time factors such as strikes, and the impact on the stock price was limited. He said, "The poor performance is partly due to the downturn in the steel industry, but one-time factors such as partial strikes at the Dangjin Steelworks are significant," adding, "Production and sales disruptions (sales volume decreased by about 600,000 tons compared to the previous quarter), resulting fixed cost increases, and recovery costs for the Pohang plant amount to approximately 390 billion KRW in one-time expenses."

He predicted a return to profitability in the first quarter of this year. Global steel prices are rebounding, and steel supply and demand in China are improving in the second quarter. Researcher Park analyzed, "Separate operating profit in the first quarter of this year is expected to be 146.7 billion KRW, and consolidated operating profit 164.2 billion KRW, turning profitable compared to the previous quarter," and "Sales volume is expected to increase by 650,000 tons compared to the previous quarter."

Meanwhile, steel prices in major regions such as China and the United States have rebounded by about 20% as of January compared to the low point in December last year. Major Asian steel companies are also raising domestic prices by about 50,000 KRW per ton in January and February.

Researcher Park diagnosed, "Domestic steel companies are also expected to achieve similar price increases in the first quarter, and the spread is expected to improve moderately compared to the fourth quarter of last year."