Market: KOSPI (005490)
Brokerage : Kiwoom Securities
Analyst : Jong-hyung Lee
Investment Rating : BUY (Maintain)
Target Price : 520,000 KRW (Maintained)
Core Momentum : The first quarterly operating profit from POSCO Argentina and upcoming completion of the Phase 2 lithium facility are expected to drive medium-term earnings recovery and highlight valuation appeal.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained BUY rating and Sector Top Pick, with target price maintained at 520,000 KRW (applying a 12mf PBR of 0.7x), offering strong upside potential from the base share price of 300,500 KRW.
- Key Valuation Multiples:
- 2026F: P/E 14.8x, P/B 0.43x, EV/EBITDA 6.5x, ROE 2.9%, Operating Margin 4.3%, Net Debt Ratio 25.3%, BPS 704,711 KRW
- 2027F: P/E 12.2x, P/B 0.41x, EV/EBITDA 6.3x, ROE 3.5%, Operating Margin 4.8%, Net Debt Ratio 26.6%
- Annual Financial Forecasts:
- 2026F: Revenue of 74.76T KRW, Operating Profit of 3.195T KRW, EBITDA of 7.27T KRW, Pre-tax Profit of 2.67T KRW, Controlling Net Profit of 1.64T KRW (+150.9% YoY)
- 2027F: Revenue of 79.33T KRW, Operating Profit of 3.77T KRW, EBITDA of 7.69T KRW, Pre-tax Profit of 3.30T KRW, Controlling Net Profit of 2.00T KRW (+21.9% YoY)
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Review:
- Consolidated operating profit reached 819.0B KRW (+16% QoQ, +35% YoY), outperforming consensus (730.0B KRW) and Kiwoom’s estimate (696.0B KRW).
- Lithium & Materials: Full commercialization of POSCO Argentina’s Phase 1 (25k tons) generated operating profit of 11.0B KRW (OPM 10.2%, turning around from -18.0B KRW in 1Q), swinging the combined battery materials operating profit to positive 41.0B KRW (vs. -7.0B KRW in 1Q).
- Infrastructure: POSCO International posted record quarterly operating profit of 429.0B KRW (+25% QoQ) on strong performance in Indonesian palm oil and Myanmar gas fields.
- Steel: Standalone POSCO operating profit improved to 274.0B KRW (+29% QoQ) due to wider roll margins and seasonal shipment growth, lifting combined steel operating profit to 403.0B KRW (vs. 345.0B KRW in 1Q).
- Outlook & Capacity Expansion:
- Following a temporary 3Q dip from seasonal maintenance, POSCO Argentina is projected to recover above 2Q earnings levels in 4Q.
- Mechanical completion of the Phase 2 plant (25k tons) in Argentina is scheduled for October 2026, setting the stage for further earnings expansion in 2027 post-customer qualifications.
- Lithium spot prices in China face downward pressure around the $20,000/ton level following the confirmed restart of CATL’s Jianxiawo mine.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an industrial group verifying tangible profitability in its lithium division through commercial production ramp-up, while reinforcing core earnings fundamentals via steel roll-margin expansion and subsidiary outperformance amid global commodity market softness. This perspective places greater emphasis on structural volume growth from upcoming capacity additions (Phase 2 completion) and the strong valuation floor at 0.4x PBR over short-term lithium spot price fluctuations or planned 3Q maintenance downtime.
To verify whether this investment thesis continues to materialize, investors should monitor the quarterly earnings rebound at POSCO Argentina in 4Q following 3Q maintenance, the timely completion and qualification timeline of the 25k-ton Phase 2 facility in October, and the stabilization of global lithium spot prices following the resumption of the Jianxiawo mine. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
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