Investment highlights
POSCO (NYSE:PKX) posted a 4Q18 operating profit of KRW876.5bn on a parent basis and KRW1.27tn on a consolidated basis, in line with our estimates of KRW877.3bn and KRW1.29tn, respectively. Pretax profit, however, fell into negative territory due to one-offs.
We maintain BUY on the steelmaker on the grounds of: 1) an attractive valuation with the stock trading at the lower end of the historical bands at 0.54x; 2) a likely increase in Chinese steel prices (which move closely in line with POSCO shares) on restocking demand ahead of the Lunar New