[Click e-Stock] "Korea Steel Expected to Improve Performance in Second Half... Target Price Raised"

Hyundai Motor Securities Raises Korea Steel Target Price to 13,100 Won

On August 26, Hyundai Motor Securities stated that Korea Steel’s performance in the second half of the year is expected to improve moderately, raising its target price from 12,000 won to 13,100 won while maintaining its “Buy” recommendation.

In the second quarter, Korea Steel reported sales of 174 billion won, an operating loss of 6 billion won, and a net loss of 2 billion won. The operating loss narrowed compared to both the same period last year (a loss of 3 billion won) and the previous quarter (a loss of 14 billion won). Second quarter domestic rebar demand reached 1.83 million tons, increasing by 0.4% from a year earlier and by 24% from the previous quarter, suggesting that robust demand had a positive impact.

Hyunwook Park, a researcher at Hyundai Motor Securities, analyzed, “Although the domestic rebar distribution price rose from 790,000 won per ton at the end of March to 860,000 won at the end of June, the domestic steel scrap price increased by a similar margin. Therefore, the improvement in spread was limited. However, since both domestic and export rebar sales volumes increased from the previous quarter, it appears that the operating loss narrowed compared to the first quarter.”

Hyundai Motor Securities anticipates an operating profit of 4.2 billion won in the second half, underpinned by improved rebar demand. Domestic rebar demand is expected to grow from 6.65 million tons last year to 6.82 million tons this year, a 2% increase, breaking a four-year decline. Most of Korea Steel’s domestic rebar exports are bound for the U.S., with volumes reaching 310,000 tons in the first quarter, 230,000 tons in the second quarter, and 50,000 tons in July, remaining at high levels. However, the outlook noted that the sustainability of this demand is still uncertain.

Park added, “Due to seasonal effects, domestic rebar distribution prices are hovering at 860,000 won per ton in August, and with the third quarter being a seasonal off-peak period, a loss is likely. However, a small return to profit is expected in the fourth quarter.”

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