KOSDAQSteel & Metals039240

Kyeong Nam Steel

₩1,947▲ 1.72%2026-10-02 close

Market Cap

₩52.6B

Turnover

₩77,326,247

Volume

40,000 shares

Shares out.

27M

PER

9.4×

PBR

0.4×

EPS

₩203

Dividend Yield

6.29%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩120 per share · Prices as of the 2026-10-02 close

Report overview

POSCO Processing Center Eyes Buyback After Succession

Kyeong Nam Steel, a KOSDAQ-listed processor and distributor of POSCO cold-rolled coils, has completed its second-generation ownership succession while announcing a policy to maintain a dividend payout ratio above 40% for 2026.

1
2025 consolidated revenue was KRW 357.1 billion and operating profit KRW 6.0 billion, both down year over year, with operating margin falling to 1.7%.
2
Operating profit slumped to around KRW 0.5 billion in Q4 2025 but recovered to roughly KRW 1.4 billion and KRW 2.2 billion in Q1 and Q2 2026, respectively.
3
In December 2025, a share gift transaction made CEO Choi Seok-woo the largest shareholder, formalizing the second-generation ownership structure.
4
The company presented a target of maintaining a dividend payout ratio above 40% and strengthening cost competitiveness in its 2026 value-up plan.
5
Delayed construction sector recovery combined with flat automotive demand is seen as limiting the pace of profitability recovery.

Business structure

Kyeong Nam Steel was founded in 1990 as Samhyun Steel Industry and renamed to its current name in 1995, operating as a KOSDAQ-listed steel processing company.

The company's business model is that of a 'POSCO processing center,' receiving cold-rolled steel coils from POSCO, then shearing, cutting, and processing them for resale to automotive, home appliance, and construction end markets.

According to available sources, its major customers reportedly include ZF Sachs Korea, Koryo Welding, LG Electronics, Hyundai Mobis, and Renault Korea.

The company's production base is located in Changwon, near LG Electronics affiliate suppliers and GM Korea and Renault Korea production lines, which is cited as contributing to regional demand stability.

Its product lineup centers on cold-rolled and hot-rolled steel processed goods, and because it lacks its own steelmaking facilities and relies on POSCO for raw material, the spread between input and processed product prices is a key driver of earnings.

Given this business structure, profitability depends more on utilization rates, sales volume management, and cost competitiveness than on large capital investment.

While similar cold-rolled processing and distribution firms exist as competitors, proximity to Changwon-area automotive and appliance parts makers is cited as a relative strength. Governance entered a more stable phase in December 2025 when second-generation owner CEO Choi Seok-woo became the largest shareholder.

Earnings trend

Quarterly revenue · Operating profit

₩96.3B₩2.3B25Q2₩86.4B₩1.7B25Q3₩81.7B₩500M25Q4₩95.6B₩1.4B26Q1₩98.3B₩2.2B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩415.3B₩11.4B2022₩390.3B₩10.7B2023₩395.5B₩9.4B2024₩357.1B₩6B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩96.3B	₩2.3B	2.3%
2025Q3	₩86.4B	₩1.7B	2.0%
2025Q4	₩81.7B	₩500M	0.6%
2026Q1	₩95.6B	₩1.4B	1.5%
2026Q2	₩98.3B	₩2.2B	2.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩415.3B	₩11.4B	₩9.7B	2.7%	9.3%	62.4%
2023	₩390.3B	₩10.7B	₩8.6B	2.7%	7.9%	49.9%
2024	₩395.5B	₩9.4B	₩7.5B	2.4%	6.6%	49.4%
2025	₩357.1B	₩6B	₩4.6B	1.7%	4.1%	39.7%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23

Earnings analysis

Kyeong Nam Steel's consolidated revenue declined from KRW 415.3 billion in 2022 to KRW 390.3 billion in 2023, KRW 395.5 billion in 2024, and KRW 357.1 billion in 2025, showing a broadly contracting trend over the past three years.

Operating profit similarly fell from KRW 11.4 billion in 2022 to KRW 6.0 billion in 2025, with operating margin declining from 2.7% (2022-2023) to 1.7% (2025). Net income attributable to owners also fell by more than half, from KRW 9.7 billion in 2022 to KRW 4.6 billion in 2025.

On a quarterly basis, operating profit fell sharply from KRW 2.3 billion in Q2 2025 to KRW 1.7 billion in Q3 and around KRW 0.5 billion in Q4, a pattern attributed to delayed construction sector recovery combined with seasonal off-peak effects.

However, operating profit recovered sequentially to KRW 1.4 billion in Q1 2026 and roughly KRW 2.2 billion in Q2 2026. Net income attributable to owners in Q2 2026 reached about KRW 2.2 billion, a marked improvement compared to the weakest quarter of 2025 (around KRW 0.6 billion in Q4).

Over the trailing four quarters from Q3 2025 through Q2 2026, combined net income attributable to owners totaled approximately KRW 5.5 billion, already exceeding the full-year 2025 figure of KRW 4.6 billion.

Nonetheless, since full-year 2025 results declined across revenue, operating profit, and net income compared to 2024, whether the recent quarterly recovery translates into full-year improvement requires confirmation in coming quarters.

Industry analysis

The domestic steel industry is assessed to have faced a dual burden in 2025 from prolonged construction sector weakness and low-priced Chinese steel imports.

According to industry trade press, domestic steel production and sales in 2026 are expected to see a modest decline from the prior year, with recovery in flat-rolled product demand tied to construction expected to be slow.

However, manufacturing-linked demand from automotive, shipbuilding, and appliances is assessed as relatively resilient, suggesting that processors like Kyeong Nam Steel with exposure to automotive and appliance customers may face somewhat less demand volatility than construction-dependent peers.

Citing World Steel Association projections, sources note global steel demand in 2026 is expected to see a modest increase, though the recovery is limited and concerns over global overcapacity persist.

FerroTimes noted that automotive, shipbuilding, and energy-related demand is comparatively favorable, while construction and real estate weakness is expected to keep recovery slow for rebar, sections, and commodity flat products.

As a processor and distributor without its own steelmaking facilities that sources raw material from POSCO, Kyeong Nam Steel is directly exposed to industry-wide spread pressure while carrying structurally lower capital investment burdens compared to integrated steelmakers.

Outlook

Kyeong Nam Steel disclosed a 2026 value-up plan targeting profitability-focused management, conservative financial operations, and maintaining a dividend payout ratio above 40%.

The company stated it qualifies as a high-dividend company under the Special Tax Treatment Control Act and plans to pursue cost competitiveness improvements, production efficiency gains, and stabilized borrowing structures to manage financial risk.

The 2025 dividend payout ratio was recorded at 69.88%, with total dividend payments of roughly KRW 3.2 billion, unchanged from 2024, indicating an intent to maintain shareholder return levels even as profit shrank.

According to WiseReport data, stable demand from key end markets such as automotive and appliances supported revenue growth, but profitability remained limited due to delayed construction sector recovery and flat automotive industry conditions.

The same source noted global steel demand is expected to rise modestly, led by emerging markets, and that Chinese production cuts and stricter import regulations could help ease oversupply. The company has indicated it will pursue collaboration with customers to solidify its growth foundation under these conditions.

Valuation

PER

9.4×

PBR

0.4×

ROE

4.8%

EPS

₩203

BPS

₩4,241

Dividend per share

₩120

Kyeong Nam Steel's price-to-book ratio has appeared below 1x in several recent data sources, suggesting the stock trades at a discount to net asset value.

Analysts have noted that low price-to-book ratios are broadly observed across steel sector peers, reflecting a general tendency for the market to assign relatively modest asset valuations across the industry.

On the dividend front, the company's 2025 payout ratio of 69.88% and its disclosed 2026 target of maintaining a payout ratio above 40% are cited as factors supporting continuity in shareholder return policy.

However, given that full-year 2025 results declined across both revenue and profit compared to 2024, future valuation assessments will likely hinge on whether the recent quarterly profit recovery translates into full-year improvement.

Where current metrics sit relative to historical trading ranges may vary depending on point-in-time consensus and confirmed results, warranting ongoing monitoring.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23

Bull factors

Formalized Shareholder Return Policy

The company disclosed a target to maintain a dividend payout ratio of 40% or higher in its 2026 corporate value-up plan, and despite a decline in profit in 2025, it kept the dividend amount the same as the previous year, preserving dividend stability.

As the company is classified as a high-dividend company under the Restriction of Special Taxation Act, there is also an incentive to maintain high dividends from a tax benefit perspective.

If this policy continues, there is a possibility that a certain level of shareholder returns will be maintained despite profit fluctuations.

Sequential Quarterly Earnings Recovery

Operating profit plunged to the KRW 500 million range in Q4 2025, but subsequently improved sequentially to KRW 1.4 billion in Q1 2026 and around KRW 2.2 billion in Q2 2026.

The sum of controlling interest net income over the most recent four quarters (Q3 2025 to Q2 2026) has already exceeded the full-year 2025 results. Stable demand from major end-use industries such as automobiles and home appliances supporting the sales base is also cited as a positive factor.

Governance Stabilization

With the December 2025 gift transfer, CEO Choi Seok-woo became the largest shareholder, formalizing the second-generation owner system.

According to reports such as TheBell, there was no change in the number of shares held or the shareholding ratio of the largest shareholder and other related parties, meaning there was no drastic change in the governance structure itself.

There is a view that the completion of succession could increase the predictability of management decision-making.

Bear factors

Multi-Year Earnings Contraction

Revenue decreased from KRW 415.3 billion in 2022 to KRW 357.1 billion in 2025, while operating profit fell from KRW 11.4 billion to KRW 6.0 billion over the same period. The operating margin also declined from 2.7% to 1.7%, with profitability pressure continuing over multiple years.

Whether the recent quarterly recovery will fully reverse this long-term downward trend has not yet been confirmed.

Delayed Construction Sector Recovery

Data from sources such as WiseReport diagnose that the delayed recovery of the construction market and the flat automobile industry are limiting profitability.

According to Korea Institute of Civil Engineering and Building Technology data, construction investment in 2026 is expected to see only a modest recovery despite an increase in public construction volume.

For distribution and processing companies exposed to demand for construction steel, this delay could be a factor slowing the pace of earnings recovery.

Spread Risk from Raw Material Dependence

Kyungnam Steel does not have its own steelmaking facilities and instead supplies cold-rolled steel sheets from POSCO for processing and sale, meaning its earnings are directly exposed to changes in the spread between raw material and product prices.

If China's low-priced supply offensive and concerns over global excess capacity continue, pressure on selling prices could persist. If reflection of raw material price increases in selling prices is delayed, there is a risk of further margin contraction.

Risk factors

Industry and Demand Risk

The delayed recovery of the construction market, the influx of low-priced Chinese steel products, and global excess capacity could burden demand and prices for flat steel products.

Given the relatively high dependence on relatively solid downstream demand such as automobiles and home appliances, earnings could react sensitively to demand changes in those industries.

Raw Material Supply and Price Risk

High dependence on POSCO as a single supply source means that changes in raw material pricing policy or supply conditions could directly affect the spread.

In a phase of expanding raw material price volatility, the risk of margin fluctuation due to inventory management and the time lag in reflecting prices in sales could increase.

Governance and Liquidity Risk

Although the second-generation owner succession has been completed, the possibility of additional share transfers among related parties in the future cannot be ruled out.

As a relatively small-cap KOSDAQ stock with a smaller market capitalization, trading liquidity may be limited, which could act as a factor increasing stock price volatility.

What to watch next

Mid-November 2026
Check the Q3 2026 earnings disclosure — the key point to watch is whether the sequential recovery trend seen through Q2 continues into Q3.
During Q4 2026
Monitor construction investment and construction output data releases — whether delayed construction recovery actually eases will gauge the pace of flat-rolled product demand recovery.
Around February 2027
Check the FY2026 year-end dividend decision disclosure — this is the point to verify whether the stated target of maintaining a payout ratio above 40% translates into an actual dividend decision.
During Q4 2026
Track policy developments on Chinese steel production cuts and import regulations — whether oversupply eases could affect domestic distributors' spreads.

Overall view

Kyeong Nam Steel is a small-cap KOSDAQ steel company that processes and distributes cold-rolled steel supplied by POSCO, and it experienced sustained profitability pressure from 2022 through 2025 as both revenue and operating profit continually declined.

However, following a trough in Q4 2025, operating profit and net income showed a sequential recovery through Q1 and Q2 2026.

The company disclosed a 2026 value-up plan targeting a dividend payout ratio above 40%, and in 2025 it maintained dividend payments unchanged from the prior year despite declining profit, signaling continued commitment to shareholder returns.

Ownership succession was completed in December 2025 when second-generation CEO Choi Seok-woo became the largest shareholder.

Nonetheless, uncertainties remain across the industry, including delayed construction sector recovery, heavy dependence on POSCO as the sole raw material supplier, and continued inflows of low-priced Chinese steel.

The key question going forward is whether the recent quarterly recovery translates into full-year earnings improvement, and whether demand from end markets such as construction and automotive materializes as expected.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.