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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] Hana Securities has forecasted that Dongkuk Steel's sales and operating profit will decline year-over-year in the third and fourth quarters.
Park Seong-bong, a researcher at Hana Securities, stated on the 25th, "Dongkuk Steel's Q3 sales are expected to decrease by 20.7% year-over-year to 856 billion won, while operating profit is anticipated to fall by 69.4% to 32.2 billion won."
The decline in domestic demand due to a slump in the construction sector, combined with the summer off-season and the Chuseok holiday, is expected to limit rebar and heavy plate sales to 696,000 tons (YoY -12.2%, QoQ -10.9%) and 193,000 tons (YoY -4.9%, QoQ +7.3%), respectively. Despite a drop in raw material costs due to the falling price of scrap iron, rebar's base price was reduced by 24,000 won per ton in July and has since remained unchanged, leading to a contraction in the rebar spread compared to the previous quarter. For heavy plates, while the spread is expected to remain similar to the previous quarter, overall profitability has worsened due to higher electricity costs during July and August.
Domestic rebar sales have continued to decline in Q3 due to the construction downturn, with rebar and H-beam sales in July dropping by 9.9% and 16.4%, respectively, year-over-year, totaling 625,000 tons and 133,000 tons. Given the reduction in housing starts and delays in major construction projects, it is unlikely that rebar demand will recover significantly by year-end.
However, with the summer off-season coming to an end and considering the effects of factory repairs and the Chuseok holiday, Dongkuk Steel's Q4 rebar sales are expected to recover slightly to 755,000 tons (YoY -11.9%, QoQ +8.5%). Heavy plate sales are also forecasted to increase by 2.5% compared to Q3, driven by a recovery in demand for construction-related products. With lower electricity costs in the fall, Dongkuk Steel's Q4 operating profit is projected to reach 41.8 billion won (YoY -46.9%, QoQ +29.5%).
However, the report expects that after bottoming out in Q3 this year, Dongkuk Steel's performance will gradually improve from next year.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
