April 20, 2024

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[THE INVESTOR] POSCO will benefit from steel price rise in the latter half and China’s policy to boost the economy, said eBEST Investment and Securities on July 31, maintaining a “buy” recommendation and 480,000 won (US$428.88) target price. 

Its operating profit on a standalone basis in the second quarter came in at 822.1 billion won, satisfying market expectations, as rise in input cost offset that of carbon steel average sales price. One-off costs including property tax have weighed down second-quarter earnings, but on a consolidated basis, its Indonesian steel subsidiary PT Krakatau POSCO has posted record operating profit, said analyst Jeong Ha-neul.

Meanwhile the Chinese government’s announcement earlier this month of a 22.3 trillion won stimulus package will bolster the strong steel prices in the country. As China strengthens efforts to improve air pollution this year, steel prices will remain strong from the third quarter until the production cut in winter. The recent increase of futures contracts could indicate a rise in steel prices.

By Hwang You-mee (glamazon@heraldcorp.com)