"Hyundai Steel, Share Price Drops Too Far... Improvement Expected in Q3" [Click e-Stock]

PBR at 0.2x...Buy Recommendation Maintained Despite Lowered Target Price
Automotive Steel Plate Price Hike Expected in Q3
Earnings Rebound Forecast

Securities analysts have reported that Hyundai Steel's share price has entered an absolutely undervalued range.

On the 4th, Yoonsang Kim, a researcher at iM Investment & Securities, stated, "The current share price is in an absolutely undervalued range, making a rebound possible even without significant improvement in business conditions," while maintaining a "Buy" recommendation. However, the target price was revised downward from 50,000 won to 40,000 won. The closing price that day was 26,450 won.

Second Quarter Results Miss Expectations…Blast Furnace Segment Expected to Rebound in Q3

Hyundai Steel's consolidated operating profit for the second quarter of this year was 57.7 billion won, up 287.5% from the previous quarter. This result fell short of the market consensus of 74.4 billion won. Although the parent company's business segment returned to profit thanks to rising rebar and section steel prices, margins in the blast furnace segment were squeezed due to rising raw material costs. Subsidiaries also recorded weak earnings as one-off gains from the previous quarter were no longer present.

From the second half of the year, earnings are expected to begin a full-fledged rebound. The price of domestically-supplied automotive steel plates, to be applied from this month through February next year, is projected to increase by at least 50,000 won. Kim explained, "Third-quarter consolidated operating profit is expected to reach 146 billion won, up 152.9% from the previous quarter," and added, "While a seasonal slowdown will inevitably reduce rebar and section steel sales volumes, higher prices for automotive steel plates and shipbuilding plates will drive improvement in the parent company's earnings."

Focus on Equity Value and Export Diversification

He also emphasized that the current price-to-book ratio (PBR) is 0.2x, which places it in the undervalued range. Kim analyzed, "Given past trends, PBR could recover to 0.3x if expectations for improved business conditions are reflected, and could even reach 0.4x with a meaningful rebound in earnings."

The section steel segment is also evaluated to have passed its worst point. For reinforcing bars, securing export channels to the United States has improved the situation compared to last year, and export regions for H-beams are being expanded to include the United States and Canada.

Kim stated, "For H-beams, export diversification and shipments to semiconductor factories and artificial intelligence (AI) data centers provide room for further improvement." He added, "Although the unfavorable macro environment and weak steel market conditions may continue for the time being, normalization of blast furnace performance through higher automotive steel plate prices in the second half, along with improved subsidiary results due to a recovery in the U.S. pipe market, are key points to watch."

This content was produced with the assistance of AI translation services.