We currently maintain an Outperform recommendation on
), one of the leading Korean steel producers. The recommendation
is based on the company's long-term growth prospects. The $25.5
billion company is the world's third largest steelmaker on the
basis of output.
Since its inception in 1968, POSCO has been producing the best
quality steel and steel products through 143 companies out of its
total 202 companies operating across the world.
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In 2012, crude steel production was at its highest level at
37.986 million tons and represented a 1.8% increase over 2011.
Finished product sales were up 1.6%; export ratio of finished
product sales was at 41.7% versus 38.6% in 2011.
The company's product portfolio has a high proportion of
value-added products, like cold-rolled steel, automotive steel
plates and electric steel sheets, which work well in its favour.
Its expansionary efforts in the domestic market as well as in the
international arena, especially the fast growing and emerging
markets worldwide, are quite remarkable.
Going forward, POSCO aims to expand its capacity to 450 Kt/year
in China, 300 Kt/year in India, and 200 Kt/year in Turkey.
Moreover, the company is planning to produce synthetic natural
gas (SNG), an effective replacement for Liquid Natural Gas (LNG).
The company invested roughly KRW 7.2 trillion in 2012 and plans
investing KRW 7-8 trillion in 2013 to expand its capacity in
steel production, gain self-sufficiency in raw material, and
further its expansion plan of energy and material businesses.
Also, the company emphasizes cost savings and achieved KRW 1.3
trillion in saving in 2012 through adjustment in raw material
blending ration in iron/coke making process, use of low-cost
by-products and substitute materials.
Other Stocks to Consider
Other stocks to watch out for are
Companhia Siderurgica Nacional
Gibraltar Industries, Inc.
Commercial Metals Company
), each with a Zacks Rank #2 (Buy).