[Click e-Stock] SeAH Besteel Holdings, New Business Momentum Accelerates... Target Price Raised

On August 1, Shinhan Investment & Securities stated that SeAH Besteel Holdings has entered a stage where new business momentum in areas such as defense, nuclear power, and special alloys is becoming visible. The firm projected that it is possible for the company to achieve a return on equity (ROE) of over 10% by 2027. Shinhan Investment & Securities maintained a 'Buy' investment rating and raised its target price to 38,000 won.

In the second quarter, SeAH Besteel Holdings recorded an operating profit of 44.6 billion won, a sharp increase of 146.8% compared to the previous quarter, significantly surpassing the market consensus of 37.4 billion won. Sales volume for SeAH Besteel rose by 12.2% quarter-on-quarter, and the effect of fixed cost reduction led to improved profitability that offset downward pressure on product prices. SeAH Changwon Special Steel also saw a 12.2% increase in sales volume, while the SeAH Aerospace & Defense Materials division achieved a 32% year-on-year increase in sales and an 82% increase in operating profit, driven by the recovery in global passenger and defense demand.

As a result, annual operating profit for 2025 is forecast to reach 123.1 billion won, up 135.2% from the previous year. Park Kwangrae and Han Sunghoon, analysts at Shinhan Investment & Securities, predicted, "The profitability improvement seen from the second quarter is likely to continue through the end of the year, making it highly probable that the company will exceed the annual market consensus of 112.7 billion won."

They further explained, "From 2026 onward, SeAH Besteel Holdings' performance will depend on several factors: the timeline for anti-dumping (AD) petitions against Chinese special steel bar imports; whether the company secures orders for nuclear spent fuel dry storage casks (CASK); and the progress of new businesses such as special alloys in the United States and STS in Saudi Arabia." Regarding the special steel anti-dumping case, they noted that the investigation is expected to begin in the second half of 2025, with provisional tariffs likely to be imposed in the first half of 2026, which could lead to a price increase scenario that year. In the nuclear CASK segment, they assessed that SeAH Besteel Holdings has a high probability of securing a meaningful market share in the initial order, which is worth about 1 trillion won, by establishing both domestic and international supply references.

Accordingly, annual operating profit is projected to reach 155.8 billion won in 2026 and 337.7 billion won in 2027.