[Click eStock] "POSCO Holdings, Undervalued Appeal Remains Despite Poor Performance"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Hyundai Motor Securities maintained its 'Buy' rating on POSCO Holdings on the 4th but lowered the target price from KRW 390,000 to KRW 330,000.

POSCO Holdings' operating profit for the second quarter is expected to be KRW 2.0879 trillion, and pre-tax profit is expected to be KRW 2.2752 trillion. Operating profit is down 5% year-on-year and 8% quarter-on-quarter. Although global steel spot prices declined from May, the average selling price rose compared to the first quarter due to contract price increases, so the steel division's performance is estimated to remain solid. Despite a decrease in profits in the energy division, profits from trading and construction divisions are expected to be favorable.

Operating profit for the third quarter is expected to decrease by 25% quarter-on-quarter to KRW 1.5691 trillion. The input cost for the steel division is expected to remain at the previous quarter's level, but profits are projected to shrink due to domestic and international price declines. In the fourth quarter, as steel input costs decrease, the spread is expected to improve compared to the third quarter. Although second-half performance will decline compared to the first half, it is evaluated to be at a higher level than during the oversupply period in China in the 2010s.

Hyundai Motor Securities analyst Park Hyun-wook said, "Investment sentiment in the steel industry is sluggish due to the global economic slowdown and price declines. The stock price is expected to move laggingly as China's steel prices and demand improve and POSCO Holdings confirms solid second-half performance." He added, "China's steel demand is expected to improve gradually, so downside risk is limited, but the timing of demand improvement is projected to be in September, so there will not be significant upward momentum in the stock price for the time being."

Park also stated, "Nevertheless, we maintain the 'Buy' rating on POSCO Holdings because the gap between return on equity (ROE) and price-to-book ratio (PBR) remains large, indicating that valuation attractiveness is still valid."

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