[Click eStock] "POSCO Holdings, Steel Prices Continue Weakness... Target Price Down 16%"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating on POSCO Holdings on the 4th and set a target price of 370,000 KRW, down 16% from the previous target.

In the second quarter, POSCO Holdings is expected to record sales of 22.3 trillion KRW and an operating profit of 1.93 trillion KRW, representing a 22% increase and a 12% decrease respectively compared to the same period last year.

Although there was an increase in input costs due to the surge in raw material prices in the first quarter, the spread margin is expected to be maintained as negotiations on prices for actual demand were successfully concluded.

The secondary repair of the Gwangyang No. 4 blast furnace is expected to impact until the second quarter, with sales volume projected to remain at around 8.4 million tons this quarter. Production resumed on the 10th of last month, and an expansion effect of 500,000 tons per quarter is anticipated.

Researcher Taehwan Lee of Daishin Securities said, “Some volume is expected to be deferred to the third quarter due to shipment and production disruptions caused by the Cargo Solidarity strike in June,” adding, “Overseas steel subsidiaries, except for the Zhangjiagang corporation in China affected by the Shanghai lockdown, have maintained solid performance until May.”

Since May, global steel prices have continued to weaken. It is predicted that demands for price reductions will increase in the second half. Price adjustments are expected to precede the decline in input costs, leading to a contraction in the spread margin.

However, the fact that China’s manufacturing PMI recorded 50.2 in June is positive. Researcher Lee stated, “This is a positive indicator that could lead to a market rebound in the second half,” and added, “Additional policies for the Chinese market expected in early third quarter need to be confirmed.”

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