Ask Warren

Hyundai Steel

004020 · KOSPI · ₩004020 · 현대제철

₩26,250▼ ₩50 (0.19%)End-of-day · Oct 27, 2026 · End-of-day prices.
Trade
Alert me
SellBuy

Valuation model · Discounted cash flow (DCF)

We use a 5-year discounted cash flow: the value of the cash the business is expected to produce, in today's money.

Fair value per share

With these assumptions the model gives no positive value.

Enterprise value
₩7.1T
Equity value
−₩354B
WACC
5.3%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal. This is not financial advice.

Why the model and the price differ

The model gives no positive value at these assumptions. What we can see:

  • To match today's price of ₩26,250, the model needs an operating margin of 3.6% every year (it uses 2.7%).
  • Or revenue growth +14.9 points a year higher than assumed in each of the 5 years.
  • Margins ranged from 0.7% to 10.7% over the last 5 years, so this is a cyclical business. The model uses the average; the price may be set by where the cycle is now. Try the margin fade option.

Treat the model as a starting point: change the assumptions to the story you believe, and compare with the multiples check below.

Bear / Base / Bull

Bear
—
Base
—
Bull
₩135,768
+417.2%

Bear: revenue growth 3 points lower every year, EBIT margin 2 points lower, WACC 1 point higher. Bull: the opposite.

Assumptions

Sign in to change the assumptions and see the results update. Sign in

Cycle options

Margin path

Every year uses the cycle-average margin (2.7%).

Revenue growth

  • -6%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-6% a year, annual reports), fading to 3% by year 5.

  • -3.7%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-6% a year, annual reports), fading to 3% by year 5.

  • -1.5%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-6% a year, annual reports), fading to 3% by year 5.

  • 0.8%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-6% a year, annual reports), fading to 3% by year 5.

  • 3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-6% a year, annual reports), fading to 3% by year 5.

Business

  • 2.7%

    Operating profit as a share of revenue.

    Default: through-the-cycle average of the last 12 months and the last 5 annual reports' operating margins.

  • 27.5%

    Share of operating profit paid as corporate tax.

    Default: Korea's top corporate tax rate (25%) plus 10% local income tax.

  • 4.6%

    The non-cash cost of wearing out equipment, added back to cash flow (% of revenue).

    Default: not in the statements, so 80% of capital spending (most spending replaces equipment that wears out).

  • 5.7%

    Money spent on factories, equipment, software and other long-term assets (% of revenue).

    Default: average of the last 3 annual reports (cash flow statements; equipment and intangibles).

  • 15%

    Stock and unpaid customer bills, less unpaid supplier bills, as a % of revenue. Each year's extra revenue ties up this much more cash.

    Default: working capital (current assets less cash and deposits, minus current liabilities other than borrowings) as a share of revenue, averaged over the last 3 years.

Discount rate

  • 2%

    How fast cash flows keep growing every year after year 5.

    Default: about Korea's long-run inflation plus real growth.

  • 4.11%

    Yield on Korea's 10-year government bond: the return with almost no risk.

    Default: Korea Treasury Bond 10-year yield on 2026-10-28.

  • 0.75

    How much the share moves when the market moves: 1 means just like the market.

    Default: 105 weeks of weekly returns against KOSPI (official index); raw beta 0.62, adjusted toward 1 and kept between 0.6 and 2.0.

  • 5.5%

    The extra return investors want for owning shares instead of bonds.

    Default: a typical premium for Korean shares.

  • 5.61%

    The interest rate the company would pay to borrow.

    Default: the 10-year yield plus a 1.5% credit spread.

Starting point

Revenue (TTM to H1 2026)
₩23T
Net debt (borrowings and leases − cash and deposits)
₩8.2T
+ Stakes and investments
₩1.2T
Associates, long-term financial assets and deposits (book value)
− Minority interests
₩474B
Shares
133,445,785
Share price
₩26,250
Market cap
₩3.5T

TTM = trailing 12 months: the last four reported quarters added together. "TTM to H1 2026" is the 12 months up to the latest quarterly or half-year report (H1 = to the end of June). Year 1 grows from there.

Past years and projection

Grey columns are reported results from the annual reports (after-tax EBIT at the model's tax rate), so you can check the growth and margin assumptions against the past. Years 1–5 are the model.

FY2023FY2024FY2025Year 1Year 2Year 3Year 4Year 5
Revenue₩26T₩23T₩23T₩22T₩21T₩21T₩21T₩21T
Growth−5.2%−10.4%−2.1%−6.0%−3.7%−1.5%0.8%3.0%
EBIT₩798B₩159B₩219B₩586B₩564B₩555B₩560B₩577B
EBIT margin3.1%0.7%1.0%2.7%2.7%2.7%2.7%2.7%
After-tax EBIT₩579B₩116B₩159B₩425B₩409B₩403B₩406B₩418B
+ Depreciation———₩998B₩961B₩946B₩954B₩982B
− Capital spending₩830B₩1.7T₩1.5T₩1.2T₩1.2T₩1.2T₩1.2T₩1.2T
− Working capital−₩3.7T₩1.1T−₩130B−₩208B−₩120B−₩47B₩25B₩93B
Free cash flow———₩394B₩299B₩223B₩153B₩90B
Discount factor———0.9500.9020.8560.8130.772
Present value———₩374B₩270B₩191B₩124B₩69B

Terminal value ₩7.9T, worth ₩6.1T today: 86% of enterprise value. It assumes spending settles at 110% of depreciation once growth slows to the terminal rate.

Cross-check: what the market has paid before

For cyclical businesses, analysts check a DCF against the multiples the stock has traded at through past cycles. Price / book is the usual anchor for them: P/E looks highest at the bottom of a cycle, when earnings are smallest, and lowest at the top. The price each band would give today:

LowTypicalHigh
Price / book (book value ₩149,074 a share)Now 0.18×₩26,4350.18×₩34,3440.23×₩45,1660.30×
P/E on run-rate earnings (Q2 2026 × 4: ₩252 a share)Now 104.3×₩5702.26×₩1,4225.65×₩3,22612.8×

Low, typical and high are the 10th percentile, middle and 90th percentile of month-end multiples since 2021, each against the latest report out by then, per share at today's share count; loss years and P/E above 100 are left out. Run-rate earnings are one quarter × 4, not a forecast. Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Sensitivity

Fair value per share as two inputs change; the middle is the current case.

WACC ↓ · Terminal growth →1.0%1.5%2.0%2.5%3.0%
4.3%₩5,191₩11,443₩20,353₩34,117₩58,269
4.8%—₩1,201₩6,802₩14,780₩27,100
5.3%———₩2,317₩9,396
5.8%—————
6.3%—————

Now (TTM)

Market cap
₩3.5T
Enterprise value
₩11T
P/E
—
P/B
0.2×
P/S
0.2×
EV/EBITDA
—
Dividend yield
1.9%

Over time (at each year end)

20252024202320222021
Price₩31,050₩21,050₩36,500₩30,600₩41,000
Market cap₩4.1T₩2.8T₩4.9T₩4.1T₩5.5T
P/E——10.6×4.0×3.7×
P/B0.2×0.1×0.3×0.2×0.3×
P/S0.2×0.1×0.2×0.1×0.2×
EV/EBITDA—————
Dividend yield1.6%3.6%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Hyundai Steel—0.2×0.2×—1.9%
POSCO Holdings16.2×0.4×0.3×7.7×3.6%
Korea Zinc18.1×1.6×0.8×—2.3%
Poongsan8.0×0.7×0.3×5.9×2.9%
SeAH Besteel Holdings12.7×0.6×0.3×9.6×3.8%
Sama Aluminium—4.3×3.1×—0.0%
HVM1,158.7×5.1×8.1×56.4×0.0%
Similar companies (median)16.2×1.1×0.6×8.7×2.6%

Calculated from end-of-day prices and filed financial statements. Not a recommendation. This is not financial advice.

Also known as: Hyundai Steel / 현대제철 / 004020 / KRX:004020

Source: KRX statistical information