PKX - Posco shoots higher on profit turnaround optimism

2023-03-31 13:31:20 ET

Posco Holdings ( NYSE: PKX ) +6.5% to a new 52-week high Friday on market expectations that the Korean steelmaker will return to a profit in Q1 as it recovers from flood damage losses.

With operations returning to normal early this year at its main steel mill hit by a September storm, Posco ( PKX ) probably improved its total steel production to 8.2M metric tons Q1 from the previous quarter's 7.5M tons, Hyundai Motor Securities analyst H.W. Park said in a research note.

As a result, Posco ( PKX ) should swing to a Q1 operating profit of 534B Korean won (~$411.7M) from a loss of 425B won in Q4, as much of its one-off repair costs already have been recognized, according to Park.

Posco ( PKX ) also could gain in the longer term from the continued expansion of its battery material business, as it targets annual production of 300K tons of lithium hydroxide by 2030.

Posco ( PKX ) merits a buy rating after taking into account two key catalysts, The Value Pendulum writes in an analysis published earlier this year on Seeking Alpha .

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