The U.S. is in a class by itself where steel price momentum is concerned, but that doesn’t mean that operating conditions haven’t improved materially for South Korea’s POSCO (PKX) as well. With improving demand from a range of end-markets, including autos, appliances, construction, and machinery, prices have quite strong in Korea, putting POSCO in a stronger position to leverage the ongoing global recovery.
POSCO shares have done okay relative to global peers like Nucor (NUE) and Steel Dynamics (STLD) since my last update, keeping pace with a nearly 65% share price move, though ArcelorMittal (MT), Cleveland-Cliffs (CLF), U.S. Steel (X), and Ternium (TX) have done even better.
POSCO isn’t exactly cheap now on a long-term basis, but I wouldn’t expect that in a period of strong price recovery. Still, I see double-digit appreciation potential on the basis of near-term EBITDA and ROE prospects. I’d also note that while POSCO’s non-steel operations have often historically been a drag on the company, the prospects for businesses like POSCO Chemical are quite good.
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POSCO Seeing A Broad Demand Recovery With Strong Price And Margin Leverage
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