Investment highlights
We expect 1Q20 parent operating profit to come in at KRW347.1bn, which is lower than the consensus estimate. Despite the likelihood of weak earnings, we maintain BUY on POSCO (PKX) because we believe: 1) the stock has sufficiently priced in earnings deterioration as it trades at 0.3x P/B, even lower than the previous bottoms seen in 1997 (0.44x P/B during the Asian financial crisis) and in 2015 (0.32x P/B when global oversupply was at its peak); and 2) expectations for a recovery in demand remain intact as China's stimulus package should