Hyundai Steel: flat steel sales growth

Hyundai Steel results confirm recovery of CR products sales. Despite the slow pace of income growth, the gradual recovery should continue. However, with the firm’s share price already reflecting expectations for a recovery in demand and hydrogen-related businesses, future interest is likely to focus on higher prices for auto steel sheet.

Higher license plate prices drive stock prices higher With the rebound in auto plate sales (the company’s flagship product) driven by increased production at Hyundai Motor Company (HMC) and Kia Motors, plate price increases have become an important variable.

Hyundai Steel plans growth alongside Hyundai Motor Group’s (HMC) hydrogen car business. Specifically, the company plans to expand its metal separator business for use in hydrogen fuel cells and increase its hydrogen production capacity from 3,500 tons per year to 37,200 tons. Such long-term goals are likely to be reflected in the stock when more details are released and earnings estimates are possible. Currently with a P /B forecast of just 0.24x for 2020, the stock is expected to rebound amid recovery in steel demand and a flood of news from the hydrogen business.

An 18.5% increase in CR sales had a positive impact on OP. Specifically, sales of Hyundai Steel’s flagship product, the car sign, rebounded alongside sales gains from HMC and Kia. In 4Q20, CR sales are expected to rise to W1.68mn tonnes (+ 17.5% YoY, + 20.9% QoQ), and higher auto sheet prices are likely to drive profit growth. The consolidated OP for 4Q20 is estimated at 72.7bn Hungarian dollars (-149.2% YoY, + 117.5% QoQ) amid increased sales and higher product prices.

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