[Click eStock] Hyundai Steel, Historic Band Lower PBR

Hyundai Motor Securities announced on the 2nd that it maintains a buy rating and a target price of 50,000 KRW for Hyundai Steel.

Park Hyun-wook, a researcher at Hyundai Motor Securities, stated, "With the improvement in steel supply and demand in China in the second half of the year and the recovery of steel demand in Western countries, the global steel market is expected to improve gradually, and profits have increased quarter-on-quarter since the low point in the fourth quarter of last year," adding, "Currently, the company's price-to-book ratio (PBR) is 0.2 times, which is at the lower end of the historical band."

He continued, "Although the steel prices in China, which have a strong correlation with the stock price, are showing a correction, limiting immediate stock price momentum, the direction of the company's quarterly earnings improvement and the expected improvement in the steel market in the future lead us to expect that investment sentiment toward the company will improve in the second half of the year."

For the second quarter, the standalone sales are expected to be 5.9425 trillion KRW, operating profit 370.6 billion KRW, and pre-tax profit 304.6 billion KRW, with operating profit decreasing by 54% year-on-year but increasing by 8% quarter-on-quarter. Consolidated operating profit is expected to be 380.7 billion KRW, down 54% year-on-year but up 14% quarter-on-quarter.

Researcher Park explained, "The basis for expecting an increase in performance compared to the previous quarter is the anticipated recovery in production and sales volume, and the improvement in steel prices and raw material spread due to the rise in global steel prices in the first quarter of this year."