[Click e Stocks] "POSCO International Expected to Deliver Strong Performance in Q3 as Well"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities maintained its 'Buy' rating and target price of 30,000 KRW for POSCO International on the 8th, expecting the company's Q3 earnings this year to exceed market expectations.

Kiwoom Securities projected POSCO International's Q3 results at 8.4122 trillion KRW in sales and 156.3 billion KRW in operating profit. These figures represent increases of 66% and 46%, respectively, compared to the same period last year. The operating profit is expected to surpass the market forecast (140 billion KRW), matching the strong performance of the record-high Q2. Researcher Lee Jonghyung of Kiwoom Securities explained, "The steel trading division will maintain solid profitability in Q3 due to favorable market conditions and the effect of export channel integration. The Myanmar gas field, which was somewhat sluggish in the first half, is expected to see profitability improvements starting in Q3 due to increased sales volume and gas prices driven by rising oil and natural gas prices, as well as a higher cost-recovery ratio." For the trading and investment corporation, strong sales of the drive motor core continue, and palm oil is expected to exceed performance expectations due to favorable prices and increased harvest volume.

In Q4, the Myanmar gas field is expected to lead performance improvements with increased sales volume during the peak season and a higher cost-recovery ratio. The researcher analyzed, "Due to the surge in demand from Europe and China, Asian LNG prices have shown strength, reaching around 32 dollars per 1 MMBtu (heat unit), more than five times higher than the same period last year. This rise in Asian LNG prices drives increased demand for Myanmar PNG, which has relatively lower prices. With ongoing power shortages in Europe and China, steady winter stock demand is expected, leading to a continued rise in LNG prices in the second half of the year, sustaining strong demand for the Myanmar gas field." A new exploration well evaluation for the Maha gas field is also scheduled by the end of the year.

Reflecting the Q3 earnings forecast, Kiwoom Securities raised POSCO International's annual and next year's operating profit forecasts by 13% and 7%, respectively, compared to previous estimates. The researcher stated, "The new growth driver, the drive motor core, is expected to show a steep upward trend this year and beyond due to the expansion of domestic electric vehicle production and increased demand from overseas customers."

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