[Click eStock] POSCO Holdings Expected to Return to Profit in 1Q

On the 11th, Eugene Investment & Securities stated that POSCO Holdings is expected to return to profitability. Accordingly, they maintained a 'Buy' investment rating and a target price of 440,000 KRW.

Researcher Lee Yujin of Eugene Investment & Securities analyzed, "POSCO Holdings' consolidated sales for the first quarter are expected to increase by 0.4% from the previous quarter to 19.3 trillion KRW, and operating profit is projected to turn positive to 605.8 billion KRW compared to the previous quarter."

Last year's fourth quarter experienced production disruptions (-360,000 tons) due to flood damage that occurred in the third quarter, a decline in average selling price (ASP) (-13.6%) caused by a slowdown in the steel market, and incurred 288.9 billion KRW in cold damage restoration costs and inventory losses.

Researcher Lee explained, "In the first quarter, not only will the one-time costs incurred in the fourth quarter be significantly reduced, but with the factory fully normalized since January 20, sales volume is expected to rise to 8.12 million tons (+580,000 tons)," adding, "The operating profit of the steel subsidiary is forecasted to be 187 billion KRW (turning positive)."

Steel input costs are expected to decrease by 58,000 KRW per ton, while selling prices are projected to increase by 12,000 KRW per ton, resulting in a margin spread improvement of 70,000 KRW per ton.

Although the Chinese market is recovering, concerns about supply are not significant. The researcher stated, "Chinese steel mills are slowing the pace of capacity utilization increases," and "Because the price decline relative to input costs is substantial, Chinese steel mills have a strong intention to control production." In fact, it is known that 201 Chinese steel companies have shut down 82 blast furnaces.

He added, "The production volume of construction steel, which is directly linked to the Chinese real estate market, also decreased by 4.7% compared to the same period last year, and inventories of construction steel are rapidly declining."

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