[Click e Stocks] "Hyundai Steel, Improved Investment Sentiment and Expected Future Leadership in Steel Industry"

Hyundai Motor Securities maintained a buy rating and a target price of 45,400 KRW for Hyundai Steel on the 7th, expecting investment sentiment to improve due to a recovery in the Chinese steel market.

Hyundai Steel's standalone sales for the fourth quarter of this year are expected to be 5.376 trillion KRW, with an operating profit of 193 billion KRW. Although sales volume is expected to increase compared to the previous quarter, the spread for both sheet and long products is narrowing, leading to a forecast that the poor performance in the third quarter will continue into the fourth quarter and the first quarter of next year.

However, the steel industry in China is expected to improve starting from the second quarter of next year. As the Chinese government's real estate policies accumulate, the area of real estate construction and ongoing projects, as well as steel demand for real estate, are expected to shift to an increase.

Hyunwook Park, a researcher at Hyundai Motor Securities, explained, "China's crude steel production has been declining since last September, and it is highly likely that next year's production will be at or below this year's level, which is expected to alleviate the oversupply originating from China." He added, "China's steel exports increased by 40% compared to the previous year, which is believed to have significantly disrupted prices in neighboring countries such as Korea."

He continued, "Domestic demand for rebar will decrease next year, which will contribute to a decline in Hyundai Steel's annual operating profit, but the impact on the stock price is expected to be limited." He also noted, "Although Hyundai Steel has a long products division, as a global major steelmaker, its stock price has been influenced by global and Chinese steel market conditions."

Researcher Park also stated, "Hyundai Steel aims for carbon neutrality by 2050, and despite several announcements regarding its decarbonization roadmap, it is still considered insufficient, which is a regrettable aspect." He added, "This is necessary to improve corporate value along with resolving the high level of debt."