[Click e-Stock] "Hyundai Steel's Q3 Operating Profit Expected to Fall Short of Consensus... Target Price Cut"

Mirae Asset Securities cuts Hyundai Steel's target price to KRW 40,000

Mirae Asset Securities said on October 12 that Hyundai Steel's third-quarter consolidated results are expected to fall short of market expectations (consensus), and lowered its target price from KRW 47,000 to KRW 40,000 while maintaining its “Buy” rating.

Mirae Asset Securities forecast Hyundai Steel's third-quarter consolidated revenue at KRW 5.64 trillion, down 1.7% year on year, and operating profit at KRW 65.2 billion, down 30.0%. Operating profit is 20% below the current market consensus of KRW 81.3 billion. Kim Giryong, an analyst at Mirae Asset Securities, said, “We estimate that operating profit will meet recently lowered market expectations,” adding, “Despite the impact of higher prices for flat-rolled steel products supplied to major customers, including automakers and shipbuilders, standalone operating profit is expected to reflect the negative effects of the off-season, including Chuseok, as well as lower sales volumes due to customer strikes and a weaker product mix.”

However, the quarter-by-quarter improvement in results is expected to continue this year. Price negotiations scheduled for the fourth quarter with domestic global automaker customers that use original equipment manufacturing (OEM) are expected to lead to further price increases. In addition, reduced supply resulting from POSCO's overhaul of Blast Furnace No. 2 at its Gwangyang Works, along with the global trend of steelmakers raising prices, is expected to support domestic prices in the fourth quarter.

Kim said, “Although the recent sharp rise in coking coal prices has raised concerns about higher costs, lower input costs resulting from the decline in the won-dollar exchange rate could help improve the spread between flat-rolled steel prices and raw material costs in the fourth quarter.”

He added, “Although rebar exports to the United States, which surged this year, have declined compared with the first half, the H-beam business is expected to defend profitability in the long products segment, supported by solid demand and further price increase efforts, alongside the decision to extend anti-dumping measures on Chinese products by five years.” He continued, “We estimate that a meaningful short-term recovery in real estate demand will be limited, but orders from seven domestic data centers related to artificial intelligence (AI) and the energy sector are expected to gradually increase.”

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