Market: KOSPI (005490)
Brokerage : Kiwoom Securities
Analyst : Jong-hyung Lee
Investment Rating : BUY (Maintain)
Target Price : 460,000 KRW (Raised)
Core Momentum : Favorable base effects from 4Q one-off charges and a sharp rebound in Chinese lithium prices driven by supply-side reforms are projected to enhance the visibility of a structural turnaround in battery materials.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained BUY rating, raising the target price by 10% to 460,000 KRW (applying a 12mf PBR of 0.65x) to reflect higher earnings turnaround visibility in battery materials amid rising lithium prices (base share price at 347,500 KRW).
- Key Valuation Multiples:
- 2026F: P/E 15.8x, P/B 0.45x, EV/EBITDA 6.6x, ROE 2.9%, Operating Margin 4.2%, Net Debt Ratio 24.6%, Dividend Yield (2025E) 3.3%, EPS 20,291 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 70.49T KRW, Operating Profit of 2.964T KRW, EBITDA of 7.568T KRW, Pre-tax Profit of 2.417T KRW, Controlling Net Profit of 1.677T KRW (+154.8% YoY)
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Consolidated operating profit recorded 12.6B KRW (-98% QoQ, -87% YoY), significantly missing consensus (410.0B KRW) and Kiwoom’s estimate (455.0B KRW).
- Steel: Standalone POSCO operating profit contracted to 337.0B KRW (-42% QoQ) due to sluggish market conditions and facility maintenance reducing shipments by 6% QoQ. Overseas steel swung to an operating loss of -111.0B KRW (vs. +53.0B KRW in 3Q) due to one-off costs related to the ongoing sale of Zhangjiagang STS.
- Eco-friendly Infrastructure: POSCO International delivered solid operating profit of 266.0B KRW, but POSCO E&C recorded a large operating loss of -190.0B KRW due to incident-related one-off expenses.
- Battery Materials: POSCO Future M recorded an operating loss of -39.4B KRW (swinging to red after 4 quarters), while other lithium-related entities posted an operating loss of -118.0B KRW, widening segment losses.
- Commodity Trends & Macro Catalysts:
- Driven by Chinese supply-side restructuring and the cancellation of 27 mining rights (including Yichun lithium mines), speculative demand pushed China’s lithium carbonate spot price to ~$23,500/ton in late January (+180% from the 1H low of $8,300/ton).
- China’s termination of the ‘Three Red Lines’ real estate policy and seasonal spring demand are expected to support a steel price rebound around March.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated materials enterprise passing through an operational trough marked by concentrated 4Q one-off losses, while positioning for a synchronized turnaround in core steel and new materials backed by China’s supply-side lithium reforms and downstream real estate stimulus. This perspective prioritizes the structural recovery in battery materials driven by lithium mining supply controls and rising ESS demand over non-recurring charges such as Zhangjiagang divestment costs and construction-related incident losses.
To verify whether this investment thesis continues to materialize, investors should monitor the durability of the lithium carbonate spot price recovery ($23,500/ton level) and the subsequent pace of loss contraction and profit recovery across lithium entities, the normalization of POSCO E&C and overseas steel earnings post one-off charges, and the realization of steel roll-margin recovery driven by China’s seasonal price rebound around March. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
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