Market: KOSPI (005490)
Brokerage : Hanwha Investment & Securities
Analyst : Jiwoo Kwon
Investment Rating : Buy (Maintained)
Target Price : 550,000 KRW (Raised)
Core Momentum : Upward re-rating of battery materials driven by an ESS-led lithium price upcycle, combined with earnings normalization across key infrastructure and overseas subsidiaries, is expected to sustain total earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained Buy rating, raising target price from 490,000 KRW to 550,000 KRW to reflect higher battery materials valuation amid rising lithium prices (19.0% upside from base price of 462,000 KRW).
- Key Valuation Multiples:
- 2026F: P/E 21.6x, P/B 0.7x, EV/EBITDA 6.5x, Dividend Yield 2.4%, ROE 2.9%, EPS 21,389 KRW
- 2027F: P/E 17.9x, P/B 0.6x, EV/EBITDA 5.9x, Dividend Yield 2.4%, ROE 3.5%, EPS 25,825 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 70.58T KRW, Operating Profit of 3.12T KRW, EBITDA of 8.12T KRW, Controlling Net Profit of 1.65T KRW, Net Debt of 16.38T KRW
- 2027F: Revenue of 72.87T KRW, Operating Profit of 3.94T KRW, EBITDA of 9.49T KRW, Controlling Net Profit of 2.00T KRW, Net Debt of 19.58T KRW
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated revenue reached 17.88T KRW (+2.5% YoY, +6.1% QoQ) and operating profit stood at 707.0B KRW (+24.5% YoY, OPM 4.0%), beating market consensus by 20%.
- Steel (Standalone): Shipment volume recovered to 8.285M tons (+7% QoQ), but margins faced pressure from FX, logistics, LNG, and raw material cost increases. Cost pass-through from Feb–Mar price hikes and AD effects on hot-rolled and plate products are expected to drive progressive margin recovery from 2Q.
- Infrastructure: Delivered operating profit of 405.0B KRW. Notably, POSCO E&C swung to a 53.0B KRW operating profit following large 4Q25 losses (targeting full-year operating profit of 120.0B KRW).
- Battery Materials: Operating loss narrowed significantly to 7.0B KRW (vs. -157.0B KRW in 4Q25). POSCO Argentina Phase 1 achieved ~70% utilization in March and logged its first monthly operating profit as low-priced initial contracts expired. PPLS loss contracted from ~50.0B KRW to 3.0B KRW on lithium price recovery.
- Industry Drivers & Near-Term Headwinds:
- Global ESS demand is emerging as the primary engine strengthening lithium market fundamentals.
- PPLS faces near-term spread pressure as spodumene price increases have outpaced lithium hydroxide gains.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated industrial group overcoming temporary standalone steel margin compression through synchronized earnings normalization across infrastructure, overseas steel, and battery materials subsidiaries, while entering a valuation re-rating cycle driven by ESS-led lithium price recovery. This perspective places greater analytical weight on the commercialization of Argentine lithium assets and the broadening upcycle in materials valuation over short-term raw material inflation and spodumene processing spread tightness.
To verify whether this investment thesis continues to materialize, investors should monitor the durability of the ESS-driven lithium price recovery, the sustained quarterly profitability of POSCO Argentina Phase 1, the easing of spodumene-to-hydroxide spread compression at PPLS, and the realization of standalone steel margin recovery as earlier price hikes take effect. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
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