Market: KOSPI (005490)
Brokerage : iM Securities
Analyst : Yoonsang Kim
Investment Rating : Buy (Maintain)
Target Price : 540,000 KRW (Raised)
Core Momentum : A structural turnaround in battery materials driven by global lithium supply bottlenecks and ramping utilization at the Argentine facility, alongside steel price hike implementations, is projected to support earnings momentum.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained Buy rating and Sector Second Pick, raising target price from 450,000 KRW to 540,000 KRW to reflect upward valuation adjustments for subsidiaries and battery materials assets (applying 1.4T KRW per 10k tons of lithium capacity), offering a 16.9% upside from the base price of 462,000 KRW.
- Key Valuation Multiples:
- 2026F: P/E 18.9x, P/B 0.7x, EV/EBITDA 7.0x, Dividend Yield 2.2%, ROE 3.5%, EPS 24,415 KRW, BPS 708,840 KRW
- 2027F: P/E 18.8x, P/B 0.6x, EV/EBITDA 7.0x, Dividend Yield 2.2%, ROE 3.4%, EPS 24,636 KRW, BPS 729,305 KRW
- 2028F: P/E 17.3x, P/B 0.6x, EV/EBITDA 6.8x, Dividend Yield 2.2%, ROE 3.6%, EPS 26,762 KRW, BPS 751,896 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 72.34T KRW, Operating Profit of 3.29T KRW, Controlling Net Profit of 1.98T KRW
- 2027F: Revenue of 72.64T KRW, Operating Profit of 3.44T KRW, Controlling Net Profit of 1.99T KRW
- 2028F: Revenue of 73.33T KRW, Operating Profit of 3.71T KRW, Controlling Net Profit of 2.17T KRW
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated operating profit reached 707.0B KRW (+5,473% QoQ), significantly beating consensus (599.2B KRW).
- Despite standalone steel weakness (operating profit of 213.0B KRW, -36.7% QoQ) from narrower roll margins, four factors drove the beat: 1) narrowing battery materials losses via commercial startup in Argentina and rising lithium prices, 2) overseas steel turnaround post-Zhangjiagang divestment loss base effect, 3) POSCO E&C turning profitable, and 4) strong performance at POSCO International.
- 2Q26 Earnings Outlook:
- Consolidated operating profit is projected to expand to 773.0B KRW (+9.4% QoQ).
- Standalone steel operating profit is expected to rebound to 370.0B KRW (+73.9% QoQ) driven by domestic hot-rolled price increases and higher shipment volumes.
- POSCO International is expected to remain strong on expanded Cost Recovery and higher oil prices, while battery materials profit may moderate slightly due to the expiration of 1Q inventory provision reversals.
- Industry Dynamics & Supply Disruptions:
- Global lithium supply is tightening following the suspension of CATL’s Jianxiawo mine (65k LCE/yr) due to licensing renewals and Greenbushes’ guidance cut (from 1.50–1.65M tons to 1.38–1.43M tons).
- Anti-dumping duties and domestic price increases for hot-rolled and automotive/appliance cold-rolled steel will progressively support steel margins across 2Q and 3Q.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated industrial and materials group capturing an inflection point in its battery materials division—underpinned by structural supply disruptions at major global lithium mines including CATL’s Jianxiawo and Greenbushes—while progressively restoring standalone profitability through domestic steel price hikes. This perspective places higher valuation priority on the tightening global lithium supply fundamentals and ramping utilization at POSCO Argentina over mid-to-long term cyclical demand softness in global steel markets.
To verify whether this investment thesis continues to materialize, investors should monitor the duration of global lithium mine disruptions and sustained utilization scaling at POSCO Argentina for a complete turnaround in materials earnings, alongside the degree to which domestic hot-rolled and cold-rolled price hikes expand standalone steel roll margins in 2Q and 3Q. 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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