[Click eStock] "POSCO, Domestic Steel Price Increase Gains Momentum... Earnings Forecast Up"

Kiwoom Securities Report
Target Price Raised by 20%

[Asia Economy Reporter Minji Lee] Kiwoom Securities stated on the 23rd that due to the favorable steel industry conditions, POSCO's stock price is expected to rise, recommending a buy rating and raising the target price by 20% to 360,000 KRW.

As China's economic indicators have improved following the COVID-19 pandemic, steel prices have been on the rise. China's hot-rolled coil prices have increased by about 20% this month alone, reaching the highest level in 11 years. U.S. hot-rolled coil prices have also continued to rise for 19 consecutive weeks, surpassing the $1,000 mark for the first time since 2018.

Jonghyung Lee, a researcher at Kiwoom Securities, explained, "Despite the surge in raw material iron ore prices since December, the increase in steel prices has exceeded that," adding, "China's spot hot-rolled coil margins have also shown a sharp upward trend in the fourth quarter."

Domestic steel prices are also expected to rise significantly from January, supported by the global steel price increase. POSCO recently announced a 30,000 to 50,000 KRW price increase for distribution-oriented hot-rolled, thick plate, and cold-rolled products, and from January, it plans to raise prices for real demand-oriented hot-rolled coils by 50,000 KRW, with additional increases scheduled for February. Considering these movements, price hikes targeting large demand sectors such as automobiles, home appliances, and shipbuilding are expected to accelerate from the first quarter of next year.

Accordingly, Kiwoom Securities raised its consolidated operating profit forecast for the fourth quarter by 25%, from 700 billion KRW to 890 billion KRW. The consolidated operating profit forecast for next year was also increased by 17%, from 3.86 trillion KRW to 4.5 trillion KRW.

Researcher Jonghyung Lee stated, "POSCO's stock price tends to follow the cycle of Chinese steel prices rather than quarterly earnings, which lag Chinese steel prices by one to two quarters," and added, "The Chinese steel industry entered an upward phase from the second quarter, and with improved economic indicators, increased liquidity, and continued government stimulus policies, the upward trend is expected to continue." The stock price, which has risen more than 30% in the past two months, is anticipated to continue its upward momentum.

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