[Click eStock] "POSCO Holdings, Steel Demand Rises... Target Price Up"

[Asia Economy Reporter Son Sunhee] Daishin Securities maintained its 'Buy' rating on POSCO Holdings on the 18th and raised the target price from the previous 370,000 KRW to 450,000 KRW. This reflects the combined value of the existing business and the recently confirmed lithium business investment.

POSCO Holdings' consolidated sales for the fourth quarter of last year are estimated to have decreased by 7.3% year-on-year to 19.8 trillion KRW, and operating profit is expected to have plunged 83.1% to 400.2 billion KRW. The operating profit margin is projected to fall short of market expectations at 2.0%, down 9.1 percentage points.

Researcher Lee Taehwan of Daishin Securities analyzed, "Steel product sales in the fourth quarter were inevitably sluggish due to production losses caused by restoration work at the Pohang Steelworks," adding, "The Cargo Solidarity Union strike likely also affected the shipment of some volumes." He further noted, "In addition to increased fixed costs due to production sluggishness, one-time restoration costs are also expected to occur."

Furthermore, Daishin Securities estimated that although raw material costs fell significantly compared to the third quarter, the decline in average selling price (ASP) was substantial due to weak steel prices caused by overall steel demand slowdown, an increase in the proportion of semi-finished product sales, and exchange rate declines in November and December last year.

However, the researcher expressed optimism, saying, "Core equipment restoration, including the No. 2 hot rolling mill, was completed last month. Although some small equipment restoration remains, it will not significantly affect production." He added, "Normal production is expected to resume from the first quarter of this year, with quarterly average sales volume expected to recover to around 8.5 million tons." He also stated, "Since the announcement of China's comprehensive real estate stimulus package in November last year, investment sentiment in the steel industry has improved this year," and "Measures such as liquidity support for real estate companies and completion support are expected to contribute to meaningful steel demand growth."