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Strategies & Market Trends : Speculating in Takeover Targets
ULBI 10.14-3.2%Jun 14 4:30 PM EDT

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To: Ahda who wrote (3750)9/1/2014 12:02:09 PM
From: richardred   of 7054
>With this type of attitude So Korea will be take over candidate for North.

It has been on their list for many many years.
One thing we do know. There's strict border control. <g>

RE: pipedream
Message 27062839

P.S. Buffett snip relating to S K-"We own in the area of 4% of Posco. It's an incredible steel company," he said. "We're looking at buying entire businesses in Korea. We're looking at buying large-cap businesses here. Korea has a number of large companies obviously. It's a hunting ground."

Berkshire Hathaway, which bought into Posco in 2006, currently owns about 4.5% of the company, according to the Korean steelmaker.

At a meeting with South Korean President Lee Myung-bak, Mr. Buffett described the country as a "promising market" and said he will introduce the success of South Korea at the next shareholders' meeting of his company.

Message 27252818

Buffett's Posco Bet Paying Off After lots of ups and downs, the Korean steel producer appears ready to chalk up big gains Other Asian stakes: BYD and PetroChina

Assif Shameen

Aug. 23, 2014 2:53 a.m. ET
Legendary investor Warren Buffett has made only three major bets on Asia. His first, on PetroChina, which he cashed out of six years ago, turned out to be a seven-bagger. Berkshire's other two Asian plays -- Korean steel giant Posco and China's BYD, a maker of electric and conventional cars -- have taken a bit longer to play out.

In 2002, Berkshire bought 1.3% of PetroChina (ticker: PTR) for $488 million, selling its stake in the oil giant for a $3.5 billion gain in 2008, just before the global financial crisis. And days after Lehman Brothers collapsed in September 2008, Buffett was seeking distressed Asian assets. Berkshire bought 9.9% of car maker BYD (1211.Hong Kong) for HK$8 (US$1.03) a share, or a total of US$230 million. In the next 18 months, the stock soared to HK$85, only to plunge 86% thereafter. BYD now is around HK$51, giving Berkshire a paper profit topping US$1.2 billion. However, prospects for the company, which makes most of its money from gas-powered vehicles, remain mixed in a crowded Chinese market.

Buffett's bet on Posco, the world's fifth-largest steel maker, has been the most trying. In 2007, Berkshire invested $1.1 billion for 4.6% of the company (5490.Korea). (Posco and BYD both have American depositary shares, traded, respectively, under the symbols PKX and BYDDY. ) At current prices, Buffett's Posco stake is worth $1.34 billion, for a pretty meager 22% gain over seven years. Posco stock peaked at 685,000 Korean won ($673) just months after Buffett revealed that he had invested in it. Posco has been bogged down by overcapacity among steel makers, falling margins, a strong won, and a weak global economy over the past six years. By early March, it was at KW272,000, more than 60% below its peak.

But now, "the worst is over," contends Cindy Park, a Nomura analyst in Seoul.

MINSEOK SINN OF CREDIT SUISSE in Seoul concurs: "Capacity expansion in China is over, continued weakness of raw-material prices are a positive, and improving demand from the local shipbuilding industry later this year should help swell" Posco's results. The stock is up 19% over the past 10 weeks, on improving industry fundamentals and Posco's change into a leaner, more focused player, says Park. CEO Kwon Oh-joon, who took over in March, has vowed to de-emphasize growth for growth's sake, focusing instead on profitability. Posco passed on acquiring rival Dongbu Steel (016380.Korea) this year, because it would have imposed a big financial burden. "Posco wants to improve operating profits from KW3 trillion ($2.93 billion) last year to KW6 trillion in 2015," says Park, who views that as achievable "if they can turn around their overseas plants, focus on selling higher-end steel products, dispose of more of their non-core assets and cut debt" from the current $19 billion. Kwon has already put the firm's 72% stake in Posco Specialty Steel on the block; it could fetch $1 billion.

Sinn expects Posco's earnings per share to grow 41.4%, to KW22,146 this year, and another 21.1% next year, to KW29,299. The Credit Suisse analyst's target for the stock is KW400,000, meaning he sees 21% upside. The shares trade at 13.3 times this year's expected earnings, or 0.6 times price to book, and have a 2.5% dividend yield. Adds Park: "I have covered the stock for 10 years and Posco has undergone a lot of pain in recent years, but it is finally looking like a turnaround story." That's just the way Buffett likes it.
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