Costs Weighing on POSCO
POSCO (NYSE: PKX) is well-positioned to achieve long-term growth as the company is rapidly shifting production to higher-margin products and undertaking investments to secure low-cost raw material supply. Moreover, the company's new FINEX technology will provide meaningful cost-savings over the long term.
However, the company's margins may suffer from high energy and raw material costs like iron ore and coking coal. Moreover, concerns of an economic slowdown cast a shadow on the future steel price outlook. We reiterate our Hold recommendation on shares of POSCO.
Kookmin Now a Sell
We are reducing our rating on Kookmin Bank (NYSE: KB) to Sell from Hold given our expectations for slower growth in earnings. In addition, we are lowering our target price to $50. KB is expected to report second earnings on July 28.
We are cutting our EPADS estimates to $8.18 from $8.30 for 2008 and to $8.63 from $8.75 for 2009, solely due to appreciation of the US dollar against the South Korean won. We expect pressure on the net interest margin to offset loan growth, with only lackluster earnings growth over the near term.
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