Analysts See Bright Outlook for Hyundai Steel for H1 of 2021

According to a report in Business Korea, Shinhan Investment Corp analysts expect Hyundai Steel to have post operating profit of KRW 121.7 billion (positive swing YoY) on sales of KRW 5.1 trillion (+9% YoY) for Q1 of 2021. Sales of steel products are estimated at 3 million tonnes, minus 90,000 tonnes QoQ, from blast furnaces and 1.92 million tonnes, minus 80,000 tonnes QoQ, from electric furnaces, which are better than the projection provided during the earnings call. While steel scrap prices rose sharply, rebar price gains were limited by the list price for rebars, causing operating profit to fall short of the consensus. Analysts added “Earnings improvement should continue in 2Q21, led by increases in rebar list price and contract prices. The rebar list price is set based on the scrap price level of the previous quarter and market conditions. A surge in the feedstock price in Q1 should be factored into the list price in Q2. Scrap prices are estimated to have jumped by 30% QoQ in Q1. Rebar demand should continue to grow given brisk apartment presales since 2019. The prospects are positive for apartment presales this year.”