Analyst Pin-board NKG – Favorable steel price and strong export to Europe and North America will boost NPAT in 1H
We think increasing HRC price and a high export volume to European and American markets, which have high profitability, will boost NKG’s performance in the 1H. Because factories will run at full capacity until June, NKG’s selling volume can reach 400.000 tons in 1H, growing by 35% YoY. The quarterly HRC average price is expected to increase by roughly 17% QoQ in 1Q, which will support NKG’s gross margin at roughly 9% this quarter, which will be similar to that in 4Q2020. Therefore, we expect NPAT will not be lower compared to 4Q2020. For 2H, NKG’s performance can be highly uncertain as the HRC price is at a high level and highly volatile. Regarding its financial health, we think NKG is becoming safer as its long-term debt decreased by 31%, and the interest burden also decreased as interest expenses fell by 17% YoY in 2020.
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