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POSCO(306,500 +2.51%) Group stocks rose all at once. This is the effect of recovering investment sentiment for economically sensitive stocks as expectations for real economic recovery increased along with the Corona 19 vaccine. In addition, POSCO’s lithium mine in Argentina was revalued due to strong raw material prices, which served as a surprise boost. Experts are predicting a further rise in POSCO Group stocks supported by earnings improvement.
POSCO closed the deal at 309,000 won, up 3.34% on the 4th. It’s the best in a year. This year, it rose by 13.60%. This is the first time since September 2018 that POSCO’s share price has risen to the 300,000 won range. POSCO Chemical(160,000 +2.24%)(1.60%), POSCO ICT(8,030 +6.36%)(5.96%), POSCO Steel(30,450 +1.16%)(1.66%), etc. POSCO International(21,550 -1.37%)All group stocks rose except for (-1.60%). POSCO International turned downward during the week due to the intensive selling of foreigners and institutions. POSCO M-Tech, a steel product packaging company with a market cap of 300 billion won(8,720 ↑29.96%)Ended the transaction at 8720 won, rising to the price limit (29.96%) as some operational forces were added.
The expectation for lithium buried in the Argentine Ombre Muerto lithium salt lake (salt lake) acquired by POSCO for 310 billion won in 2018 served as a positive for the group stocks as a whole. POSCO said, applying the current market price, the accumulated sales will reach 35 trillion won. Amid rising prices of major metal raw materials such as lithium, nickel, and cobalt, POSCO Group’s ability to supply raw materials was highlighted. Investors also noted that the demand for lithium-ion secondary batteries is rapidly increasing, led by electric vehicles.
Behind the scenes, the securities industry is evaluating that expectations for earnings improvement have been laid down. This is because the news of lithium was already known to the market in January. Kim Hyun-wook, a researcher at Shinhan Investment Corp. explained, “Considering the growth potential of the electric vehicle market, the net profit from lithium production is estimated at a maximum of 1,02 billion won in 2023.” Considering that the 2023 net profit consensus (average of securities firms’ estimates) is about 3 trillion won, it does not account for a large proportion. This is the background that some pointed out that expectations have risen somewhat.
Rather, it is reasonable to see it as a process of finding the stock price in place. Steel demand is growing rapidly due to the global economic recovery. Expectations for an’earning surprise’ in the first quarter of this year are also coming out. Hyun-wook Park, a researcher at Hyundai Motor Securities, said, “The stock prices of global competitors such as Japan Steel are also hitting the highest level.” POSCO’s operating profit consensus this year is 4,219.4 billion won, up 75.5% from last year. It increased 17.9% from the forecast three months ago (3,5774 billion won). Despite a surge in stock prices, the 12-month lead-in stock price-earnings ratio (PER) remains at 9x.
The earnings of other POSCO group stocks are also clearly improving. POSCO Chemical’s operating profit consensus this year increased 111.0% from last year to KRW 127.2 billion based on stable demand for anode and cathode materials. Profitability damage from a sharp rise in the price of raw materials such as nickel is unlikely to be significant. This is because raw material price fluctuations are linked to product supply prices. POSCO International and POSCO ICT also raised expectations for earnings improvement this year due to the economic recovery.
Reporter Go Yoon-sang [email protected]
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