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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Minyoung] On the 24th, NH Investment & Securities lowered its target price for Hyundai Steel by 10% to 43,000 KRW. This adjustment reflects a downward revision in future earnings estimates due to the delayed improvement in the steel industry.
Despite the industry downturn, NH Investment & Securities noted that Hyundai Steel remains undervalued relative to its asset value (PBR 0.2x). This suggests a need to focus more on potential factors for future performance improvements.
The report indicated that, despite weak domestic demand in China leading to increased exports, the construction start area has increased compared to the previous year. By May, the construction start area had risen by 5.6% year-on-year, which is expected to drive rebar demand in the second half of the year.
Furthermore, if the Chinese government's plan to crack down on illegal low-priced exports is effectively implemented, it could contribute to an overall improvement in the steel supply-demand balance.
According to the securities firm, Hyundai Steel's consolidated operating profit for the second quarter is expected to increase compared to the previous quarter but decrease year-on-year, falling short of consensus estimates. The initially anticipated improvement in the steel industry during the second quarter has not materialized, leading to continued sluggish performance.
In the second quarter, the average domestic price of hot-rolled products dropped by 5% compared to the previous quarter, and rebar prices fell by 8.5%. Additionally, an increase in imports of plate products from China and a decline in shipments of long products due to the sluggish construction industry are anticipated.
AlphaBIZ Kim Minyoung(kimmy@alphabiz.co.kr)
