Deutsche Bank Downgrades POSCO (PKX) to Hold
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Deutsche Bank downgrades POSCO (NYSE: PKX) to Hold.
Deutsche analyst says, "Downgrade to Hold on weaker demand outlook Incorporating DB's revised regional steel price assumptions, we cut 09E NP by 40% and our TP by 38%. We believe a weaker demand outlook globally will lead to further steel price declines and deterioration of margins in the steel sector. The potential acquisition of DSME is another concern. 09E PBR of 1x does not look demanding but still stands above the 05 trough of 0.7x...The negative impact of falling steel prices, however, should be milder on Posco vs. regional peers due to the price discounts and its efficient cost structure."
POSCO is an integrated steel producer in Korea. The Company produced approximately 32.8 million tons of crude steel, during the year ended December 31, 2007 (including 2.5 million tons of stainless steel), a substantial portion, of which was produced at Pohang Works and Gwangyang Works.
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