SEOUL, KOREA - Shinhan Investment Corp. said on April 7 SeAH Steel will see its operating profit rise by at least 25 billion won this year from 2013. It, however, has not announced a target price and investment opinion on the stock. Shinhan Investment Corp. analyst Hong Jin-joo said that the steel maker's operating profit this year would increase 16.5 percent from the previous year.

 

Even after subtracting 70 billion won in capital expansion reserve funds and 10 billion won in interest cost from the 231.2 billion won in EBITDA (earnings before interest, taxes, depreciation, and amortization), the analyst said, the company will have a surplus cash fund in excess of 10 billion won.

 

She added, "Given the sizable surplus cash volume, there may be additional mergers and acquisitions, a turn toward a positive cash flow after paying back all debts, or higher dividend payouts within three years from now."

 

The company will also benefit from a recent preliminary anti-dumping ruling in the United States against steel pipe exporters excluding those from Korea. The analyst commented, "Korean steel pipe makers plan to increase their pipe exports to the United States by more than 20 percent from the previous year. SeAH Steel will also do that and expects to increase its operating profit by 9.9 billion won from it. The effect of the acquisition of an Italian pipe manufacturer and the base effect of a strike in the third quarter last year will bring up this year's operating profit as well," she said further.