South Korean steelmaker Hyundai Steel reported KRW 6.11 trillion ($4.3 billion) in consolidated revenue and KRW 57.7 billion ($41 million) in operating profit in the second quarter of 2026.
Revenue increased by 2.7% year on year, while operating profit declined by 43.3%. Compared with the previous quarter, revenue increased by 6.4% and operating profit surged 267.5%. Hyundai Steel also returned to profitability, reporting KRW 12.1 billion ($8.6 million) in net profit during the period.
The quarterly improvement was driven by higher sales of high value-added products, increases in product prices and cost-cutting initiatives. Sales volumes of both flat and long steel products also increased.
China’s Production Cuts Could Support Hyundai Steel
Weak demand in the steel sector continues amid a delayed recovery in construction activity, while increasingly protectionist trade policies adopted by countries are adding further pressure to the industry.
Against this backdrop, Korea Investment & Securities expects China’s policies aimed at reducing steel production to play a key role in Hyundai Steel’s performance during the second half of the year. As of August 8, the brokerage initiated coverage of Hyundai Steel with a “Buy” recommendation and a target price of KRW 62,000.
Korea Investment & Securities analyst Choi Moon-sun said China’s continued production cuts have started to push iron ore prices lower, while the decline in the won/dollar exchange rate is also providing support in terms of raw material costs.
According to the analysis, the spread between product prices and raw material costs is expected to widen in the second half of the year as raw material costs decline while product prices rise, supporting Hyundai Steel’s profitability.
Hyundai Steel’s Low Valuation Highlighted
Korea Investment & Securities believes Hyundai Steel’s share price does not adequately reflect the value of the company’s assets.
The analysis highlighted that Hyundai Steel’s valuation remains at a significantly low level when taking into account the market value of its 6.07% stake in Hyundai Mobis.
According to Choi’s calculations, excluding the Hyundai Mobis stake, Hyundai Steel’s total equity stands at KRW 18.3 trillion ($13 billion). The market value of Hyundai Steel’s stake in Hyundai Mobis is estimated at approximately KRW 2.7 trillion ($1.9 billion).
The analyst stated that, on a theoretical basis, Hyundai Steel’s actual price-to-book ratio (PBR) could fall as low as 0.06, indicating a very low valuation relative to the asset value of a global-scale steelmaker with annual production capacity of approximately 20 million tons.
However, due to Hyundai Motor Group’s ownership structure, the scenario in which Hyundai Steel sells its stake in Hyundai Mobis is considered unlikely. The calculation was presented primarily to illustrate the valuation of Hyundai Steel’s shares.
Korea Investment & Securities expects that Hyundai Steel’s shares could see a reduction in their valuation discount even without the steel industry entering a full-fledged upcycle, as a transition out of the current downturn could be sufficient to support the stock.
The brokerage set a 12-month target price of KRW 62,000 for Hyundai Steel based on a target PBR of 0.42.
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