[앤츠랩]Raw material prices rise, but the stock price? Untidy POSCO

A healthy food restaurant, Ants Lab. The stock market was booming during the year-end and New Year holidays, so this time I want to find out which stocks have gone up a little less. According to F&Guide 12-month forward PER of 9x or less, PBR of 1x or less, and ROE of 3% or more based on this year’s estimate. There are 41 stocks that all match. (The lower the PER/PBR multiple means the stock is undervalued, and the higher the ROE, the better the ability to generate profits.)

In general, there were a lot of financial stocks such as banks and securities, but as a rule of thumb, I have never seen a lot of financial stocks rise.

Stocks undervalued as iron ore prices rise
Earnings improved in the fourth quarter of last year, and new businesses such as rechargeable batteries were also spotlighted.
The national pension of the largest shareholder, and the ruling party criticized for the death of a successive worker.

First of all, the prices of raw materials such as crude oil, copper and iron have been skyrocketing recently. With the release of the corona vaccine, expectations for an economic recovery have arisen, and the central bank is pushing up raw material prices by releasing huge amounts of money. Here, as the’factory of the world’ China’s manufacturing industry is reviving, demand for steel is increasing.

The iron ore futures price is now $152.88, a 103.62% rise from a year ago, so doubled. For POSCO, rising costs may be a burden, but as the sales price increased appropriately, operating profit in the fourth quarter of last year improved. At the beginning of this year, the price of hot-rolled steel was raised, and now we are discussing an increase in the price of steel plates with ship makers.

For POSCO, 49% of sales account for steel, 34% for trade (POSCO International), 12% for construction, and 5% for others (POSCO Chemical, etc.). POSCO Chemical makes anode and cathode materials for electric vehicle batteries. To this end, POSCO bought an Argentine salt lake containing lithium (battery raw material) for 280 million dollars (approximately 310 billion won). Here I say that lithium can make 370 million electric vehicles.

In addition, POSCO International expects that the Myanmar gas field will continue to bring stable income. Yesterday, we also signed a business agreement to supply the by-product hydrogen generated when melting molten metal in steelworks to Hyundai Motor Group, which makes hydrogen cars.

In short Downstream industries that require iron, such as automobiles, shipbuilding, and shipping, are doing well, and new businesses other than iron are expected to have a good impact on the overall stock price as the future is bright.

Then what is the problem. First of all, the steel industry is a bit old. As you know, in the past, Japanese steel companies were number one, but POSCO (Pohang Steel) caught up, and now POSCO is being pursued by Chinese companies. Some say it has already caught up.

Also, the biggest topic in the world economy is’eco-friendly’. According to the Paris Climate Agreement, all countries are complaining about reducing their carbon footprint. Excluding electricity generation, the steel industry emits the most greenhouse gases. Representative of the chimney industry. Then, in the future, we need factories and construction methods that make steel in an eco-friendly way, and this will certainly cost a lot of money. Just thinking about it is dizzy.

In addition, POSCO’s largest shareholder is the National Pension Plan. Because of the stewardship code (institutional investors’ investment responsibility principle), the voice of the politicians is increasing recently to intervene in POSCO’s management by reporting the National Pension Service. In particular, the deaths of workers working at the POSCO steel mill are endless. POSCO Chairman Choi Jung-woo even apologized to the public yesterday. Leaders of the ruling party, such as Democratic Party Representative Lee Nak-yeon and House Representative Kim Tae-yeon, even said, “I cannot restrain my anger at the irresponsible attitude.

In conclusion, after 6 months

The indicators look good, but stocks can be frustrating if you actually put in money