iM Securities said Hyundai Steel's first-quarter results missed market expectations, but forecast a rebound in the second quarter with solid momentum likely to extend into the third quarter. The brokerage raised its target price to 50,000 won from 46,000 won and maintained its "buy" rating.
Kim Yun-sang, an analyst at iM Securities, said first-quarter consolidated operating profit came to 15.7 billion won, down 63.7% from the previous quarter and below the market consensus of 44.3 billion won.
Kim said the company’s headquarters operations swung to an operating loss of 72.5 billion won, citing lower prices for automotive steel sheet, higher raw material costs and rising scrap prices. Those factors narrowed roll margins in both the blast furnace and long steel businesses, he said.
He added that subsidiaries performed steadily, supporting expectations for improved results in the second quarter.
Kim said subsidiaries benefited from recognition of unrealized gains at overseas coil centers, improved business conditions and tariff refunds at Hyundai Steel Pipe, and the impact of stronger nickel prices at BNG Steel.
He forecast second-quarter consolidated operating profit of 127.0 billion won, up 706.3% from the previous quarter. Kim attributed the improvement to higher hot-rolled steel prices and rising rebar distribution prices, which he said should widen roll margins in the blast furnace and long steel units and return headquarters operations to a profit of 80.0 billion won.
Kim said macro factors such as energy costs and interest rates remain unfavorable for steel prices, but global steel prices have recently been firm. He said gains in rebar and hot-rolled prices are continuing, and an increase in automotive steel sheet prices is expected during the third quarter. He projected that these price increases would support solid performance at least through the third quarter.
However, he said the recent price rise appears driven by supply factors and may not apply evenly across all products given differing demand conditions by end-use industry.
* This article has been translated by AI.
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