Kiwoom Securities said on Apr. 10 that SeAH Besteel Holdings is expected to see improved profitability for key products in the second quarter and gain momentum for a share price rise from SpaceX's listing. It maintained an investment opinion of "outperform" and raised its target price to 77,000 won from 33,000 won. SeAH Besteel Holdings closed the previous trading day at 69,500 won.
Lee Jong-hyeong of Kiwoom Securities said SeAH Besteel Holdings' results will improve year over year, noting it posted 134.7 billion won in operating profit in the first quarter.
As the reason, the analyst cited improved product profitability during the seasonal peak when steel demand revives.
The analyst said, "Shipments of products from SeAH Besteel and SeAH Changwon Integrated Special Steel are expected to normalize as inventory adjustments wrap up and the market enters the seasonal peak," adding, "Since last year, the domestic and overseas special steel market has been sluggish, but the trend of quarterly earnings improvement is expected to continue through the second quarter, the seasonal peak."
Profitability is also expected to improve for products such as stainless steel (STS) bars.
The analyst said, "Since February this year, prices of major STS bars have been raised by 100,000 to 400,000 won, so profitability is expected to improve," adding, "SeAH Aerospace and Defense, which produces special alloys, is expected to continue its stable profitability and results this quarter."
As a driver for a share price rise, the initial public offering (IPO) of SpaceX slated for June this year was cited.
SeAH Besteel Holdings is building its SST (Seah Superalloy Technology) plant in Texas, with completion scheduled for June. According to the analyst, the plant plans to supply products to U.S. space and aviation corporations such as Lockheed Martin and SpaceX.
Regarding this, the analyst said, "As it is known that SeAH Changwon Integrated Special Steel has already signed a supply contract with SpaceX in the past, the U.S. SST plant is expected to be able to obtain rapid certification and begin deliveries simultaneously with the start of production."