[Click eStock] "POSCO Expected to Enter Revaluation Zone from Q2"

[Asia Economy Reporter Song Hwajeong] Meritz Securities maintained its 'Buy' rating and target price of 450,000 KRW for POSCO, expecting the company to enter a full-scale revaluation phase starting from the second quarter of this year.

While the consolidated earnings for the fourth quarter of last year are expected to meet market consensus, the separate operating profit is projected to slightly underperform the consensus. Mungyeongwon, a researcher at Meritz Securities, explained, "The separate operating profit is expected to be 1.71 trillion KRW, a 226% increase compared to the same period last year, but slightly below the consensus of 1.82 trillion KRW. The spread worsened as the surge in coking coal prices was reflected in input costs amid a slowdown in price increases. Additionally, the sales volume decline due to the Cargo Solidarity strike appears to have further widened the earnings reduction beyond market expectations." He added, "In the first quarter of this year, while the price decline may intensify, a slight increase in earnings is possible as the decline in iron ore prices begins to be recognized in input costs."

The transition to a holding company is evaluated as neutral in the short term and positive in the medium to long term. Researcher Mungyeongwon stated, "Although the transition to a holding company through a physical division is generally viewed negatively, considering the management's strong will for an unlisted steel business company structure and shareholder value enhancement policies such as treasury stock cancellation to be announced ahead of the shareholders' meeting, it is judged to be at least a neutral issue. In the medium to long term, it could serve as an opportunity for the revaluation of new business values such as lithium, nickel, and hydrogen."

A full-scale stock price revaluation is expected to begin after the second quarter. Researcher Mungyeongwon said, "Since early December, POSCO has recorded excellent stock returns due to global interest rate hikes and expectations for the Chinese government's accommodative monetary policy. However, considering that China's stimulus measures have fallen short of market expectations and that steel demand may weaken during the Chinese Lunar New Year and Olympic periods, a full-scale revaluation is likely to take place from the second quarter onward."

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