Daishin Securities on the 16th downgraded the target price of POSCO Holdings from 570,000 KRW to 520,000 KRW, stating that "the steel spread margin (the difference between raw material and product prices) will shrink due to increased raw material cost burdens." The buy rating was maintained.
On the same day, researcher Lee Taehwan of Daishin Securities said, "POSCO Holdings' consolidated results for the first quarter of this year are expected to be sales of 18.3 trillion KRW and operating profit of 462.8 billion KRW, down 5.5% and 34.3% respectively compared to the same period last year," adding, "The operating profit margin is projected at 2.5%. These results fall short of market expectations."
Steel prices reflect the rise in raw material costs from the end of last year with a time lag. The researcher stated, "Although efforts have been made to pass on price increases since the beginning of the year, the spread margin is likely to shrink," and added, "Sales volume is expected to be around 8 million tons due to scheduled blast furnace maintenance. Overseas steel subsidiaries also have low profit expectations due to the sluggish performance of the China Zhangjiagang corporation."
Non-ferrous metals are expected to record results below market expectations as POSCO International, which contributes significantly to earnings, experiences a decline in cost recovery in Myanmar. POSCO Future M is likely to turn a profit due to the reversal of inventory provisions following the rise in lithium prices, but its impact on consolidated profits is expected to be minimal.
The researcher added, "There is a lack of visible earnings momentum in the immediate term," but noted, "Variables such as the recovery of demand in China, reduced import volumes due to lower operating rates in China, and the realization of anti-dumping tariffs will be factors to watch."
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