[Click eStock] POSCO International Expected to Benefit from Rising Raw Material Prices

[Asia Economy Reporter Junho Hwang] Hi Investment & Securities recently maintained the target price of POSCO International at 27,000 KRW, anticipating benefits from the soaring commodity prices.

Due to COVID-19, central banks around the world have injected liquidity, and inflation caused by mismatches between supply and demand is occurring due to supply chain bottlenecks and strengthened decarbonization policies. In particular, the recent energy price surge caused by Russia's invasion of Ukraine has further intensified inflationary pressures. As prices soar, the possibility of stagflation, where the economy stagnates, has increased. Accordingly, countries are set to begin tightening policies such as raising benchmark interest rates to curb inflation, raising concerns about economic contraction.

Regarding this, Lee Sangheon, a researcher at Hi Investment & Securities, analyzed, "Although safe assets may be highlighted as an alternative to stagflation concerns, commodities-led sectors that can pass on the rising commodity prices to product prices are expected to benefit to some extent." He added, "Currently, POSCO International is trading at a PER of 6.8 times based on this year's expected earnings, making its valuation attractive," and forecasted, "This year, improvements in Myanmar gas field performance and the visible growth potential related to Senex Energy's natural gas could drive valuation increases."

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