Hana Securities maintained a target price of 45,000 KRW and a 'Buy' investment rating for Hyundai Steel on the 5th, stating that after turning profitable in the first quarter, its operating performance is expected to improve stepwise in the second half of the year.
Researcher Park Seongbong said, "Hyundai Steel's consolidated sales and operating profit for the first quarter of 2024 are expected to increase by 2.9% from the previous quarter to 6.3 trillion KRW and turn to a profit of 81.1 billion KRW, respectively," adding, "The turnaround to profitability will be driven by increased sales volume and expanded spreads in flat steel products in the first quarter."
Park explained, "With a recovery in sales centered on flat steel products, total steel sales volume is expected to reach 4.62 million tons," and added, "Due to the rise in average selling price (ASP) of products, the spread is expected to expand by approximately 35,000 KRW per ton, while electric furnace products are expected to see a spread contraction of about 10,000 KRW per ton due to a decline in ASP."
He further noted, "The turnaround to operating profit is possible as one-time costs such as large inventory valuation losses in the fourth quarter and year-end bonuses are eliminated," but added, "However, profitability of Hyundai BNG Steel and overseas Steel Service Centers (SSC) is expected to deteriorate compared to the fourth quarter."
He also commented, "Due to sluggish domestic demand in the second half of last year and a drop in import prices from China, a large operating loss was recorded in the fourth quarter," and assessed, "This year, profitability is expected to improve from the first quarter low point toward the second half, making an annual increase in operating profit possible."
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