[Click eStock] "POSCO Q2 Earnings Miss Market Consensus... Optimism for Second Half"

Korea Investment & Securities Issues 'Buy' Rating and 250,000 KRW Target Price... Closing Price on 1st at 178,500 KRW

[Asia Economy Reporter Kum Bo-ryeong] An analysis has emerged predicting that POSCO's second-quarter earnings will fall short of market consensus.

According to Korea Investment & Securities on the 2nd, POSCO's second-quarter standalone operating profit is expected to turn to a loss, significantly underperforming market consensus. Although sales volume in the second quarter is expected to increase from the previous forecast of 7.35 million tons to 7.8 million tons, a sharp contraction in margin spread is anticipated due to a decline in carbon steel selling prices.

On a consolidated basis, earnings are estimated to avoid losses. POSCO's second-quarter consolidated operating profit is expected to be 174 billion KRW, with relatively stable performance expected in E&C and trading sectors despite losses in the steel division.

Jung Ha-neul, a researcher at Korea Investment & Securities, explained, "While consolidated earnings will be better than standalone, the significant underperformance against market consensus remains unchanged. The steel division, which accounts for 69% of last year's annual operating profit, is underperforming. Due to the impact of COVID-19, steel sales as intermediate goods increased to respond to weak demand in downstream industries, making a decline in selling prices inevitable."

Korea Investment & Securities has given POSCO a 'Buy' rating with a target price of 250,000 KRW. The closing price on the 1st was 178,500 KRW. Researcher Jung said, "The second quarter, which is expected to show poor performance, has already passed. Now, focus should be on the second half of the year when sales recovery centered on automobiles is expected."

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