[Click eStock] "POSCO International Secures Growth Potential Through Performance Improvement and New Parts Business"

Rising Raw Material Prices and Strong Industry Conditions Boost Earnings Expectations
Growth Potential Also Emerging Amid Surging Demand for Electric Vehicle Motor Cores

[Asia Economy Reporter Minwoo Lee] Posco International is expected to achieve solid performance this year due to improved results from the previously sluggish Myanmar gas field. Additionally, growth potential in new businesses such as motor cores is expected to become visible with the expansion of the eco-friendly market.

On the 13th, Hi Investment & Securities maintained a 'Buy' rating and a target price of 27,000 KRW for Posco International based on these factors. The closing price on the previous trading day was 22,750 KRW.

In the second quarter of this year, Posco International recorded consolidated sales of 8.5245 trillion KRW and an operating profit of 170 billion KRW. These were strong results, increasing by 62.3% and 26.5% respectively compared to the same period last year. This improvement in profitability was due to increased trading from favorable steel market conditions and rising raw material prices. Lee Sangheon, a researcher at Hi Investment & Securities, explained, "The steel trading division, which integrated export channels of group companies in the Americas, Asia, and China last year, saw a significant improvement in profitability due to continuous market upturns and increased sales volume. Additionally, the trading company also improved its performance thanks to increased trading amid favorable global market conditions, and the investment corporation continues to maintain stable growth in performance."

Strong performance is also expected in the second half of the year. This is because, amid favorable steel market conditions, improved results from the previously sluggish Myanmar gas field are anticipated. The researcher forecasted, "The Myanmar gas field is expected to see profitability improvement due to an increased investment recovery ratio in the second half and a rise in sales prices that follow oil prices." Hi Investment & Securities projects that Posco International will record consolidated sales of 30.3475 trillion KRW and an operating profit of 601.8 billion KRW this year, representing increases of 41.3% and 26.8% respectively compared to the previous year.

New businesses are also expected to shine with the growth of the eco-friendly market. Posco International is developing new businesses centered on liquefied natural gas (LNG), food, and component materials. The component business is related to the growth of the eco-friendly market. Posco SPS, a 100% subsidiary spun off on April 3 last year, produces and distributes STS cold-rolled steel, precision materials, motor cores, and also manufactures thick plate processing and steel structures. Through Posco SPS, it is analyzed that eco-friendly new businesses such as electric vehicle drive motor cores and hydrogen fuel cell separator plates will become visible.

The researcher emphasized, "In particular, motor cores play a heart-like role in drive motors, so demand is expected to surge with the growth of the electric vehicle market. Since 2009, they have been supplied to Hyundai Motor and Kia, and currently supply leading global automakers, with sales increasing year by year: 82 billion KRW in 2018, 108.9 billion KRW in 2019, and 167.1 billion KRW last year."

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