Heungkuk Securities maintained its “buy” rating on Hyundai Steel and raised its target price to 55,000 won. The brokerage cited expectations for improving steel market conditions and the impact of planned price increases, saying a near-term earnings rebound is becoming more visible.
Jinsoo Jung, an analyst at Heungkuk Securities, said Hyundai Steel’s first-quarter results missed market expectations, with revenue of 5.7397 trillion won and operating profit of 15.7 billion won. He attributed the shortfall to a lagging effect that reflected lower prices for flat steel products and higher costs, which narrowed rolling margins. Still, sales volume rose to 4.26 million tons, which he said confirmed a demand recovery led by flat products.
Jung said improved steel scrap prices and contributions from standalone subsidiaries helped cushion results. He added that consolidated profitability improved on one-off gains such as a tariff refund at Hyundai Steel Pipe and expanded operations at the Pune SSC in India.
Looking ahead, Jung took a more upbeat view of the industry. He said global supply and demand are improving as Chinese hot-rolled coil prices rise and exports decline, and that anti-dumping effects are also creating conditions for domestic steelmakers to regain market share.
He said domestic steelmakers are pursuing price hikes to reflect higher raw material costs, with the impact expected to show gradually in results starting in the second quarter. He added that a faster normalization is expected, particularly in the long steel segment.
Jung said he raised his EBITDA estimate by 16% and increased the target price by applying a target EV/EBITDA multiple of 6.3. He forecast that improving market conditions would continue into the second half, alongside the effect of price increases for high value-added steel sheets used in automobiles.
* This article has been translated by AI.
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