[Click eStock] "Hyundai Steel’s Outlook Improving, But Still Undervalued"

Eugene Investment & Securities Initiates Coverage
with Target Price Set at 37,000 Won

On September 1, Eugene Investment & Securities announced that it is initiating coverage on Hyundai Steel with a “Buy” rating and a target price of 37,000 won.

The company suggested an appropriate enterprise value of 4.9 trillion won. This figure was calculated by applying a 0.25x multiple, which is the average price-to-book ratio (PBR) over the past five years, to the 12-month forward book value per share (BPS).

Sojeong Kim, an analyst at Eugene Investment & Securities, projected, “Profitability is expected to improve as effective selling price increases for automotive steel sheets and shipbuilding plates become pronounced in the second half of the year, and as raw material prices stabilize at lower levels.”

She also noted, “Currently, Hyundai Steel’s valuation stands at 0.2x PBR on a 12-month forward basis, which is close to the historical low range, making it an attractive entry point.” As of August 31, Hyundai Steel’s share price was 30,500 won.

The company’s third-quarter sales are estimated to reach 6.054 trillion won, with operating profit expected at 131.2 billion won. These represent year-on-year increases of 5.6% and 40.8%, respectively. Kim explained, “Flat steel products are expected to drive profitability in the third quarter,” adding, “Although raw material prices are rising, higher average selling prices (ASP) achieved through pricing negotiations are likely to more than offset these increases.”

For the full year, sales are expected to reach 24 trillion won and operating profit is projected at 395.3 billion won, indicating growth of 6.0% and 80.3%, respectively. Net profit attributable to controlling shareholders is also forecast to turn positive at 108 billion won.

Eugene Investment & Securities also pointed out that Hyundai Steel launched its Power Infrastructure Task Force (TF) team this April to respond to new demand markets for high-value-added steel. The main segments are data centers, ESS enclosures, and transmission towers.

In particular, Kim mentioned that approximately 200,000 tons of steel are used per 1GW-scale data center. She stated, “When calculated on a per-capacity basis, cumulative steel demand is projected to reach around 1.96 million tons by 2030. If Hyundai Steel secures a 30% market share, the potential shipment volume for data centers would be approximately 590,000 tons.”

She added, “After capacity expansions accelerate from 2028 onwards, Hyundai Steel is expected to secure new sales channels of around 200,000 tons annually.” She further projected, “Demand for tower steel, driven by transmission grid expansion, is expected to grow from 30,000 tons in 2025 to 110,000 tons by 2028.” Kim concluded, “Hyundai Steel possesses the full portfolio required for all types of transmission towers—including lattice towers, tubular plate towers, and steel pipe towers—which is expected to position the company to benefit from grid investment.”

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