Will Foreign Buying Bring Sunshine to POSCO?

Stock Price Rises for 4 Consecutive Days with 9 Trading Days of Net Buying... Outlook for Earnings Improvement This Year

[Asia Economy Reporter Song Hwajeong] POSCO, which showed weakness due to poor performance last year, has recently been on the rise thanks to foreign buying momentum. This year, with performance expected to improve, attention is focused on whether the stock price can continue its rebound.

According to the Korea Exchange on the 15th, POSCO has risen for four consecutive days recently. Since the beginning of this year, it has increased by 2.33%, recovering the stock price that had fallen due to poor performance forecasts for the fourth quarter of last year.

The stock price rise is led by foreigners. Foreign investors have net purchased POSCO for nine consecutive trading days until the previous day. This year, foreigners have bought POSCO shares worth 86.9 billion KRW, placing it among the top net purchases. This influx of buying is interpreted as foreign investors focusing more on the improvement in first-quarter performance this year rather than the poor fourth-quarter results of last year.

According to financial information provider FnGuide, POSCO's consensus for the fourth quarter of last year forecasts sales of 16.3953 trillion KRW and operating profit of 836.1 billion KRW, representing decreases of 1.36% and 34.34% respectively compared to the same period last year. Securities firms expect POSCO's fourth-quarter performance to fall short of the consensus. Byun Jongman, a researcher at NH Investment & Securities, said, "The consolidated operating profit exceeding 1 trillion KRW per quarter, which continued since the third quarter of 2017, lasted until the third quarter of last year, but the fourth quarter is expected to significantly underperform market expectations due to a decline in average selling price (ASP) and the reflection of one-time costs."

From the first quarter of this year, a turnaround in quarterly performance is expected. Lee Jonghyung, a researcher at Kiwoom Securities, explained, "Since November last year, steel prices in China and Asia have reversed to an upward trend, and with the full-scale use of low-cost raw materials centered on coal, the spread between steel products and raw materials at the headquarters is expected to start improving from the first quarter. As the one-time costs reflected in the fourth quarter of last year disappear, operating profit in the first quarter is expected to turn around to 900 billion KRW." He added, "The hot-rolled margin in China, which precedes POSCO's performance, has improved since bottoming out in June last year, and with coking coal prices falling until the end of last year, POSCO's input costs are likely to decrease until the second quarter, so stable performance improvement is expected at least until the first half of this year."

This content was produced with the assistance of AI translation services.