- We maintain our rating for NKG at UNDERPERFORM despite increasing our target price by 53% as the company’s share price has rallied by 58% over the last 14 months.

- Our higher target price is due to (1) rolling our target price forward to mid-2025, (2) changing our valuation methodology to 10-year multistage DCF from our previous mix of 70% 5-year DCF and 30% target P/E, (3) 5% higher 2026-28F aggregate NPAT-MI and (4) 100bps lower WACC, all of which outweigh our 26% downward revision in 2024-25F aggregate NPAT-MI.

- We expect 2024F NPAT-MI to surge 335% YoY from 2023’s low base, driven by (1) top-line growth of 17% and (2) a 160bps YoY EBIT margin improvement as we expect 2024F GPM expansion to outweigh high shipping fees. However, we lower 2024F NPAT-MI by 38% due to below-expectation 2023/Q1 2024 results, both fulfilling 18% of 2023F/old 2024F forecasts. 

Kindly access the details in our Sector Update, which is available for download at the link below.

Galvanized Steel Sector - Sales and margins to recover from low base, valuations outpace fundamental progress

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