Shinyoung Securities said on the 25th that Hyundai Steel is expected to show a clear increase in earnings as car sheet prices are expected to rise in the second half of this year. It initiated coverage with a "buy" rating and a target price of 48,000 won. The previous session's closing price was 29,050 won.
Shinyoung Securities analyzed that in the first quarter of this year Hyundai Steel posted a separate operating loss of 72.5 billion won as price cuts for automotive sheet, which accounts for more than 30% of sales, coincided with higher raw material and freight costs.
It projected a turnaround to a separate operating profit of 61.7 billion won in the second quarter of this year on the back of higher hot-rolled ASP. It also said full-year operating profit will meet market expectations at 433.8 billion won on a consolidation basis and 252.2 billion won on a separate basis.
Park Jin-su, an analyst at Shinyoung Securities, said, "In the second half of this year, as car sheet price hikes are reflected, the spread will improve and a clear increase in earnings will be achieved."
Park said a rebound in domestic rebar demand will be difficult in the short term because the recovery in the local construction market remains slow. However, after the U.S. quota was removed, replacing volumes from major export countries to the United States based on price competitiveness, along with growing demand for data centers, is expected to contribute to raising the operating rate of Hyundai Steel's long product division.
Park said, "Sales in the long product division, which had continued to contract since 2022, are expected to resume growth starting this year," adding, "In a situation where low-carbon equipment pressure and trade barriers are expanding across the steel industry, Hyundai Steel's competitiveness with its blast furnace–electric arc furnace system and its competitiveness in the supply line of automotive sheet with a stable parent company are expected to stand out."