[Edaily Reporter Kwon Oh Seok ] HANWHA INVESTMENT & SECURITIES announced on the 11th that it is maintaining its “Buy” rating on SeAH Steel Corporation(306200)but lowering its target price to 174,000 won.

Kwon Ji-woo, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “Although third-quarter results fell short of consensus estimates, we expect a recovery in the fourth quarter,” adding, “We are lowering the target price while maintaining our investment rating to reflect the downside risks to profitability stemming from uncertainty regarding additional project awards and the strengthening of the Korean won.”
Previously, third-quarter consolidated revenue totaled 477.2 billion won (up 43.9% year-over-year), while operating profit was 20.2 billion won (returning to profitability), falling 11.8% short of the operating profit consensus of 22.9 billion won. The strong won and timing differences in cost adjustments reduced profitability in both export and domestic markets. Although export prices in U.S. dollars rose by about 6% due to higher U.S. oil casing prices, the won-dollar exchange rate fell by 5.4%, causing won-denominated prices to remain at second-quarter levels.
He explained, “The decline in the share of North American sales from 47.2% to 37.0% due to delivery schedule differences in North American projects also weighed on export margins. In the domestic market, despite an 8.5% increase in selling prices, the spread narrowed as high-priced hot-rolled steel purchased in the second quarter was used with a time lag.”
He added, “Operating profit is expected to recover to 26.2 billion won in the fourth quarter. This is because the cost of hot-rolled coil—which is being used with a time lag—is decreasing, and the rise in U.S. oil casing prices since the third quarter is being reflected in export prices.” He further elaborated, “The domestic spread in the fourth quarter is expected to narrow or remain flat, and with the won continuing to strengthen, the extent of improvement is likely to be limited; we believe it will fall short of the current consensus estimate (28.0 billion won).”
Accordingly, the 2027 operating profit estimate was raised by 5.7% to 114.4 billion won from the previous 108.2 billion won. This reflects the third-quarter earnings level and an upward revision to the U.S. hot-rolled coil price outlook, with an 8.5% increase in profit projected compared to 2026.
Analyst Kwon noted, “Although we have raised the operating profit estimate, we have lowered the target price-to-book ratio (PBR) from 0.47x to 0.40x to reflect downside risks related to securing follow-on projects and exchange rates. “The rationale for maintaining our investment rating is the likelihood that U.S. oil casing prices will remain at elevated levels rather than plummeting after peaking,” he said. “Furthermore, the preliminary anti-dumping ruling against competing countries (such as Taiwan and the UAE) in the U.S. is expected to eliminate the price advantage of low-cost products that had been driving down the unit price of Korean-made products, thereby supporting the lower end of the price range. Key points to watch going forward include the sustainability of strong U.S. hot-rolled coil prices and the securing of additional project orders.”