Market: KOSPI (005490)
Brokerage : Hana Securities
Analyst : Sung-bong Park, Seung-gyu Kim (RA)
Investment Rating : BUY (Maintained)
Target Price : 740,000 KRW (Maintained)
Core Momentum : Following the recognition of heavy one-off charges in 4Q, the deconsolidation of Zhangjiagang upon sale completion and synchronized subsidiary earnings normalization are projected to drive an immediate profit recovery from 1Q.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained BUY rating and Sector Top Pick, with a 12-month target price of 740,000 KRW (maintained), offering substantial upside potential from the current share price of 364,000 KRW.
- Key Valuation Multiples:
- 2026F: P/E 9.91x, P/B 0.50x, EV/EBITDA 5.57x, ROE 5.27%, DPS 10,000 KRW, BPS 729,682 KRW, EPS 36,728 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 71.90T KRW, Operating Profit of 3.59T KRW, Pre-tax Profit of 3.01T KRW, Net Profit of 2.97T KRW (+359.50% YoY)
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Consolidated revenue reached 16.8T KRW (-5.4% YoY, -2.4% QoQ) and operating profit stood at 13.1B KRW (-86.3% YoY, -98.0% QoQ), significantly missing market consensus (394.8B KRW).
- Steel: Domestic weakness and hot-rolled mill maintenance pushed sales volume down to a 3-year low of 7.72M tons (-8.8% YoY, -6.4% QoQ). Raw material cost increases (+13,000 KRW/ton) outpaced carbon steel ASP increases (+9,000 KRW/ton), squeezing spreads.
- Subsidiaries & One-offs: Large one-off expenses (including 60.0B KRW in employee severance) during the closing phase of the Zhangjiagang sale led to a 131.9B KRW operating loss at overseas steel. Battery materials losses widened on cathode volume declines and high base effects. POSCO E&C posted heavy operating losses, POSCO International earnings declined, and energy, maintenance, and retirement provision expenses increased QoQ.
- 1Q26 Earnings Outlook:
- Consolidated operating profit is projected to rebound sharply to 653.9B KRW (+15.0% YoY, +4,890.0% QoQ).
- With maintenance concluded, POSCO steel shipments are expected to recover to 8.04M tons (-1.4% YoY, +4.1% QoQ). Input costs are projected to rise ~5,000 KRW/ton with stable ASP, slightly contracting spreads.
- Zhangjiagang is set to be excluded from consolidated results from 1Q post-closing. Battery materials losses are projected to narrow on cathode volume recovery and higher lithium prices, while POSCO E&C turns profitable and POSCO International expands earnings.
- Medium-Term Drivers: Domestic steel import restrictions, Chinese production controls, and 2H fixed asset investment recovery in China.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated industrial group leaving behind an operational trough heavily burdened by facility maintenance downtime, severance charges from the Zhangjiagang divestment, and subsidiary losses, while entering an immediate earnings normalization phase from 1Q through portfolio cleanup and affiliate recoveries. This perspective prioritizes the removal of structural loss-making assets via the Zhangjiagang deconsolidation and the sharp turnaround across construction and materials subsidiaries over non-recurring 4Q charges.
To verify whether this investment thesis continues to materialize, investors should monitor the final closing and deconsolidation of the Zhangjiagang entity in 1Q, the recovery of standalone steel shipments back above 8.0M tons post-maintenance alongside spread trends, and the return to operating profitability at POSCO E&C coupled with loss contraction in battery materials via higher cathode shipments. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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