Samsung Securities has issued a positive outlook on POSCO Steel and raised its target price. In a report released on the 27th, the securities firm acknowledged that while first-quarter results were somewhat underwhelming, it expects a significant turnaround starting from the second quarter. Accordingly, the target price was raised from the previous level of 47,000 won to 51,000 won, and the investment rating was maintained as "Buy." This move is interpreted as reflecting the potential for value recovery following the anticipated improvement in future earnings trends.
At the time of the first-quarter earnings announcement, revenue reached 5.7 trillion won, a 4.6% increase year-on-year, but operating profit plummeted by 63.7% to just 1.57 billion won. This fell 72% below the market consensus, sparking concerns among investors. Researcher Baek Jae-seung pointed to rising raw material costs due to increases in steel and coking coal prices, as well as foreign exchange rate fluctuations, as the primary causes of the poor performance. In particular, it was analyzed that margin pressure intensified because prices for plate and sheet products failed to fully pass on cost increases during the first quarter.
However, the researcher stated that earnings improvement is expected from the second quarter onwards due to a revival in domestic demand and sustained price increases in rebar distribution. Since the end of last September, when tariffs were imposed, imports of Chinese rebar have decreased by over 90% year-on-year, causing domestic rebar distribution prices to rise by 150,000 won per ton over the past three months. POSCO Steel already announced a price increase of 50,000 won per ton in February and is reportedly pursuing an additional increase in April.
In addition to this upward price trend, attention is also being paid to the possibility that the decline in Chinese steel exports will lead to improved supply and demand. As of March this year, Chinese steel exports decreased by 10% year-on-year, and if this trend continues, it is expected that global supply and demand will ease as steel production in China declines. Given that the current Price-to-Book Ratio (PBR) is extremely low at 0.28 times, it is assessed as a sufficient opportunity for trading.