Dongkuk Steel Mill Co. fell to the lowest level in more than six weeks in Seoul trading after Goldman Sachs Group Inc. cut its stock rating to “sell,” saying the company’s earnings growth may slow.
South Korea’s third-largest steelmaker lost 6.8 percent to 39,600 won as of 12:10 p.m. on the Korea Exchange, heading for the lowest close since March 31 and becoming the worst performer on the MSCI AC Asia Pacific Index.
Goldman Sachs reduced its recommendation on Dongkuk from “neutral,” forecasting a 9.5 percent decline in earnings-per-share in 2012. Dongkuk expects a “positive” impact on earnings from investments made in recent years, Kim Sun Hong, a company spokesman, said by phone today. He declined to comment on the Goldman Sachs’ rating.
“Dongkuk will be unable to sustain its recent higher plate prices and orders as Japanese supply comes back online,” Goldman Sachs analysts led by Rajeev Das wrote in a report today. The analysts also cited a “very weak” domestic construction market.
Dongkuk Steel has advanced 13 percent this year compared with a 2.7 percent gain in the Kospi Index. Posco, South Korea’s largest steelmaker, fell 5.9 percent in the same period, while Hyundai Steel Co., the second-largest, added 3.2 percent.