POSCO Responds to First Share Buyback in 13 Years with Stock Price Rally

[Asia Economy Reporter Song Hwajeong] POSCO is seeing a significant stock price defense effect as it embarks on a large-scale share repurchase for the first time in 13 years.

As of 9:22 AM on the 14th, POSCO was trading at 186,000 KRW, up 2.76% (5,000 KRW) from the previous day. The stock price has been rising for four consecutive days. Except for two days this month, the trend has mostly been upward.

This is interpreted as the effect of active stock price defense. Earlier, POSCO announced on the 10th that it had decided to enter into a trust contract for acquiring treasury shares worth 1 trillion KRW. The purchase started on the 13th and will continue until April 12 of next year. POSCO's share repurchase is the first in 13 years since February 2007. Jung Haneul, a researcher at Korea Investment & Securities, said, "This share repurchase is a choice to defend against excessive stock price decline caused by factors such as the novel coronavirus (COVID-19). What is different this time is that the trust contract period lasts for one year, indicating a plan to use it as a safety net to defend the stock price over the next year."

Baek Jaeseung, a researcher at Samsung Securities, evaluated, "This share acquisition, decided amid rising uncertainties in the steel industry, represents efforts to enhance shareholder value even under difficult business conditions and expresses confidence in POSCO's competitiveness to maintain the most stable profitability compared to global steel companies, which is positive."

Earlier last month, POSCO Chairman Choi Jeongwoo purchased about 100 million KRW worth of shares, followed by 62 executives buying a total of 2.3 billion KRW worth of shares, actively defending the stock price.

Supported by active stock price defense, POSCO's stock price has risen 12.42% just this month.

Although share repurchases and other measures are defending the stock price, poor earnings remain a burden. Researcher Jung said, "Due to a decrease in sales volume caused by global automobile production disruptions, first-quarter operating profit is expected to be 513.9 billion KRW with an operating margin of 3.4%," adding, "In the second quarter, supply disruptions and demand shocks will occur simultaneously, making the COVID-19 related earnings slump the most severe." This first-quarter earnings forecast falls short of the consensus of 658 billion KRW operating profit and a 4.3% operating margin.

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