[Click eStock] "Hyundai Steel, Steel Price Increase... Earnings Recovery Expected"

On the 16th, Hyundai Motor Securities maintained a buy rating and a target price of 43,000 KRW for Hyundai Steel, stating that global steel prices have been rising since the beginning of the year, and earnings are expected to recover from the first quarter of this year after bottoming out in the fourth quarter of last year.

Hyundai Steel's standalone sales for the first quarter of this year are expected to be 5.49 trillion KRW, with an operating profit of 147 billion KRW. Although operating profit is forecasted to decrease by 76% compared to the same period last year, it is expected to turn positive compared to the previous quarter. On a consolidated basis, operating profit is also expected to turn positive to 164 billion KRW compared to the previous quarter.

Researcher Park Hyun-wook of Hyundai Motor Securities explained, "The basis for expecting a turnaround to profitability is that the plate spread is maintained at the previous quarter's level, and the long product spread is expected to shrink, but one-off factors such as the partial strike at the Dangjin Steelworks in the fourth quarter of last year have been resolved, and sales volume is also expected to normalize."

Researcher Park also said, "Steel prices in major regions such as China and the United States have risen by 30-50% compared to the beginning of the year," adding, "In particular, Baosteel in China announced monthly domestic price increases from January to April. Despite the continued sluggish global steel demand, major steelmakers are raising prices, which is clearly different from the oversupply situation originating from China in the 2010s." He continued, "The global price increases are expected to contribute to the improvement of the company's plate spread from the second quarter with a time lag."