[Edaily Reporter kyoungeun kim ] Meritz Securities announced on the 22nd that it is maintaining its “Buy” rating and a target price of 97,000 won for POSCO INTERNATIONAL(047050), which recently acquired U.S. shale gas assets. This represents an upside potential of 67.8% relative to the current price.
Moon Kyung-won, an analyst at Meritz Securities, stated in a report released that day, “The company has decided to acquire non-operating Marcellus shale gas assets in the U.S. for $550 million (approximately 750 billion won),” and "Considering the potential for Henry Hub prices to rise due to future increases in U.S. gas demand, regional expansion into North America, and synergies with the LNG trading business, positive upside potential is on the horizon."
He assessed the asset as a major one, with an expected production volume of 124 MMcf (million cubic feet) per day—equivalent to approximately 1 million metric tons of liquefied natural gas (LNG) per year and representing about 50% of the Myanmar gas field based on the company’s equity stake.
Analyst Moon said, “The after-tax return on invested capital (ROIC) is estimated at approximately 10%, which exceeds the weighted average cost of capital (WACC) of 7.3%.”
The firm also assessed the dividend stream following the investment as favorable. Analyst Moon noted, “The company has been consistently paying out 50% of its growing net income as dividends,” adding, “The projected dividend yield is 4.9% for 2026 and 5.4% for 2027.” He continued, “While the five-year average (projected for 2022–2026) cash flow from investing activities amounts to 1 trillion won, earnings before interest, taxes, depreciation, and amortization (EBITDA) stands at 1.7 trillion won; consequently, despite aggressive investment and dividends, the increase in debt is not significant.”
Future investments in rare earths and permanent magnets were cited as potential candidates, and the “acquisition, earnings growth, and dividend” formula is expected to continue at least until the mid-2030s, when production from the Myanmar gas fields begins to decline.
Research Analyst Moon said, “Rather than waiting for a specific trigger, a ‘buy-and-hold’ strategy focused on dividend yield and the appeal of undervaluation is effective.”