Steelmaker’s share stages tenfold growth on solid performance


POSCO shares attracted public attention again on Wednesday, one day after its founder and honorary chairman Park Tae-joon died.

The country’s representative steelmaker is the No. 3 stock on KOSPI, with its market capitalization valued at 34.2 trillion won, easily outpacing other blue-chip shares.

POSCO, whose shares closed up 500 won at 390,000 won on Wednesday, is widely regarded as one of the favorites for investors at home and abroad, thanks to its world-class competence and market influence.

The National Pension Service is the biggest shareholder with a 5.5 percent stake, but the combined total of foreign ownership is also high, at upwards of 48 percent.

POSCO has attracted foreign capital since 1994 by issuing depositary receipts worth $3.13 billion overseas. Nippon Steel Corporation holds a 5.04 percent stake in POSCO in the form of DR.

Even billionaire investor Warren Buffett has stakes in POSCO, with a portion is estimated to be around 4 percent. Buffett generated buzz among Korean investors as he bucked the bearish trend by expanding his stake in POSCO at the height of the financial turmoil sparked by the bankruptcy of Lehman Brothers.

Buffett said in May that he takes a positive view of POSCO, even though the steelmaker faces some challenges in non-steel business areas.

The continued popularity of POSCO shares is largely based on the company’s solid standing and the stable valuation on the local bourse, analysts said.

POSCO, founded in April 1968, was first listed on the Korean stock market in June 1988. The opening share price came in at 38,058 won.

Given that POSCO shares closed at 389,500 won on Tuesday, the company’s share price rose almost ten-fold. The lowest price of its stock was 14,780 won in August 1992, and the all-time high was 765,000 won in October 2007.

The performance of POSCO shares is far above the average of other steelmakers outside of Korea.

POSCO’s standing on the local bourse is considerable, as well. Since it accounts for a 3.68 percent of KOSPI’s total market capitalization, it is tracked by many analysts and investors throughout the year as its key component that sheds light on where the Korean market is headed.

POSCO is also a large-scale company that has an expansive network of affiliates in Korea and elsewhere. It runs non-steel businesses such as trade and construction, but its core revenue generator remains steelmaking, which makes up 74.2 percent of its 2010 earnings that stood at 47.8 trillion won.

Shinyoung Securities said POSCO’s edge among investors will be strengthened this year in connection with the shifting trends in the world’s steelmaking market.

By Yang Sung-jin
(insight@heraldcorp.com)