NH Investment & Securities projected on November 2 that Hyundai Steel's performance will continue to recover due to rising steel product prices. However, reflecting the slower-than-expected pace of price increases, the firm adjusted its target price from 40,000 won to 37,000 won, a decrease of 7.5%. The investment rating remains 'buy.'
Choi Young-kwang, a researcher at NH Investment & Securities, stated, "The upward trend in domestic steel product prices, driven by protectionist policies, and the resulting performance improvement remain valid. Additionally, the recent stabilization of raw material prices is expected to contribute to performance enhancement."
However, following the imposition of anti-dumping duties on Chinese steel products, imports from third countries have increased, leading to a slower rise in domestic steel distribution prices and Hyundai Steel's selling prices than initially anticipated. Consequently, the forecast for next year's operating profit has been lowered by 6.6%.
Hyundai Steel's consolidated operating profit for the third quarter was 87.1 billion won, a 51.0% increase from the previous quarter, but below market expectations. Although product selling prices rose by 6.5%, sales volume decreased by 11.2%. Factors such as reduced working days due to the Chuseok holiday, strikes at automotive clients, and a decline in rebar exports to the U.S. impacted performance.
In contrast, the fourth quarter is expected to see continued performance improvement driven by a recovery in sales volume and additional price increases. NH Investment & Securities forecasts that fourth-quarter sales volume will rise by 12.7% to 4.43 million tons, with operating profit expected to increase by 41.2% to 123 billion won.
Choi noted, "The current stock price is only 0.18 times the expected price-to-book ratio (PBR) for this year, trading at the lower end of the valuation band, highlighting the performance recovery trend and limited valuation pressure."
* This article has been translated by AI.
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