POSCO - ADR (PKX) - Bull of the Day

POSCO (PKX) remains well positioned to benefit from a wide regional diversification and a higher proportion of value-added products in its product mix over the longer term.

Expectations of higher exports and lower imports of steel in Korea is encouraging for Korean steel companies, apart from fears of rising competition among local players. Moreover, POSCO's joint venture with Krakatau Steel, new processing facility in China and stake acquisition in Australia's iron ore and coal mines will prove to be the prime share-driving catalysts.

Growth may be restricted due to higher raw material prices that led to disappointing third quarter financial results. Overall, however, anticipating positive growth momentum and outperformance compared to the market, we upgrade POSCO to an Outperform recommendation.
 
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