Investment highlights
POSCO (PKX) posted parent operating profit of KRW832.5bn for 1Q19, beating our estimate and the consensus estimate by 14% and 10%, respectively. Consolidated operating profit came to KRW1.20tn, 6% higher than our forecast. We reiterate BUY on POSCO for the following reasons; 1) improving indicators concerning the Chinese steel sector raise expectations for POSCO’s 2H19 earnings; 2) the sharp rise of iron ore prices may weigh on 1H19 earnings but steel price hikes should keep earnings moderate; 3) looking at the historical P/B and dividend yield, we are assured the stock