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SeAH Besteel Holdings |
[Alpha Biz= Paul Lee] Dae Shin Securities lowered its target price for SeAH Besteel Holdings to 27,000 won from 32,000 won on Thursday, citing disappointing fourth-quarter earnings and weak demand in specialty steel and stainless steel (STS) markets.
The firm stated, "SeAH Besteel Holdings recorded a 50 billion won operating loss in the fourth quarter of 2024, a significant turnaround from a profit last year. This greatly missed the consensus operating profit estimate of 2.5 billion won, marking a major earnings shock." Dae Shin Securities further explained, "Considering the weak demand outlook for specialty steel and STS products, we are revising down our 2025 net profit forecast."
The company's fourth-quarter sales volume was the lowest since 2020, with 329,000 tons of Besteel and 94,000 tons of Changwon Specialty Steel, reflecting the ongoing downturn in demand.
Dae Shin Securities attributed the operating loss to one-off items, such as provisions for standard wage liabilities and inventory valuation losses. The firm stated, "With these one-off factors disappearing, SeAH Besteel Holdings is expected to return to profitability from the first quarter of 2025."
Regarding the performance of SeAH Aerospace and Defense Materials, a subsidiary of SeAH Besteel Holdings, Dae Shin noted that while it represents only about 3% of the consolidated revenue, the division’s profit has grown every quarter, with operating profit reaching 17.7 billion won in the fourth quarter of 2024 and an operating margin of 21.3%.
The aerospace and defense sectors, which are the main markets for the division, continue to see strong demand, and the firm expects stable profit contributions from this subsidiary in the future.
Despite a disappointing year, Dae Shin praised SeAH Besteel Holdings for maintaining its dividend per share (DPS) at 1,200 won (6.3% yield), demonstrating efforts to enhance its corporate value. Looking forward, Dae Shin Securities maintained its optimism for the company, highlighting key upcoming projects, such as the Saudi STS seamless pipe plant set for completion in 2025 and the U.S. specialty alloy plant slated for 2026.
These investments are expected to drive strong growth, particularly with the potential removal of 25% tariffs and quota restrictions on U.S. steel products, which could open new opportunities in shale gas-related specialty steel pipes.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
