[Click eStock] POSCO Posts Separate Operating Profit of 1 Trillion Won in 3 Years... Target Price Rises Again

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment maintained its 'Buy' rating on POSCO on the 16th and announced that it would raise the target price from the previous 380,000 KRW to 450,000 KRW, reflecting upward revisions in this year's earnings estimates and adjustments to the target price-to-book ratio (PBR, 0.8x).

Park Seong-bong, a researcher at Hana Financial Investment, analyzed, "While tight steel supply and demand is maintained globally, China is also set to begin substantial production cuts," adding, "Tight steel supply and demand is expected to continue through the second half of the year, acting as a factor for POSCO's annual profitability improvement this year."

POSCO's standalone sales and operating profit for the first quarter of this year are expected to reach 7.9 trillion KRW (YoY +12.6%, QoQ +10.9%) and 1.02 trillion KRW (YoY +121.9%, QoQ +94.1%), respectively. The operating profit not only significantly exceeds the market consensus of 804.9 billion KRW but is also expected to reach 1 trillion KRW for the first time in three years.

China's largest steelmaker, Baoshan Steel, announced price increases for flat products in April, raising hot-rolled and thick plate prices by 300 yuan per ton, and automotive steel and cold-rolled steel by 150 yuan and 100 yuan per ton, respectively. This is expected to lead to increased import prices domestically, driving additional price hikes for flat products in the domestic market. Furthermore, since the beginning of the year, the Chinese government has announced plans to reduce steel production capacity and output to cut carbon emissions, which is expected to alleviate concerns over supply-demand deterioration due to supply expansion in the Chinese steel market this year. This is anticipated to give steelmakers an advantage in price negotiations with buyers. Recently, the sharp rise in ultrafine dust concentration in China and the strengthening of steel production regulations to improve air pollution are also positive factors for both domestic and international steel markets.

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