Hyundai Motor Securities noted on the 20th that the poor performance of DaehanSteel this year is inevitable and should be approached from a medium-term perspective. It maintained a 'Buy' investment recommendation and a target price of 21,000 won. The closing price of DaehanSteel the previous day was 15,000 won.
Park Hyun-wook, a researcher at Hyundai Motor Securities, said, "Due to weak front-end demand and poor performance, the stock price is expected to fluctuate around the current level for the time being," adding, "With a price-to-book ratio (PBR) at 0.5 times, it is at the lower end of the historical band, and considering leading indicators, there is a possibility of performance improvement starting next year."
DaehanSteel recorded sales of 349 billion won and an operating profit of 8 billion won in the second quarter of this year (April to June). Although the operating profit decreased by 58% compared to the same period last year, it increased by 300% compared to the previous quarter. However, the operating profit margin was 2%, reflecting a poor business environment, indicating that it remains at a low level.
Domestic rebar demand in the second quarter was 1.85 million tons, a 12% decrease compared to the same period last year. It increased by 10% compared to the previous quarter due to seasonal high demand, but is the lowest level for rebar demand in the second quarter over the past 10 years.
Researcher Park commented on this, saying, "It is due to the poor performance of the housing market, which is a front-end industry," and added, "Domestic rebar demand is estimated to be 7.03 million tons, forecasting a 10% decrease compared to last year's 7.79 million tons, which is even lower than the 7.51 million tons recorded in 1998."
He further noted, "If domestic rebar production capacity is estimated at 12 million tons, the capacity utilization rate in the rebar industry is expected to be only about 60%. However, considering the lag with leading indicators, although rebar demand will not reach past normal levels starting next year, it is expected to show a gradual recovery."