Market: KOSPI (005490)
Brokerage : iM Securities
Analyst : Yoonsang Kim, Doyeon Kong (RA)
Investment Rating : Buy (Maintain)
Target Price : 420,000 KRW (Raised)
Core Momentum : With massive losses concluding from the Zhangjiagang sale and POSCO E&C provisioning, a visible earnings turnaround is projected from 1Q, reinforced by supply-side discipline in lithium and nickel raising materials asset valuations.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained Buy rating and Sector Top Pick, raising the target price from 390,000 KRW to 420,000 KRW to factor in higher valuations for battery materials subsidiaries (rebounding share prices and higher per-ton lithium value), representing a 15.4% upside from the base price of 364,000 KRW.
- Key Valuation Multiples:
- 2026F: P/E 20.1x, P/B 0.5x, EV/EBITDA 6.6x, Dividend Yield 2.7%, ROE 2.6%, EPS 18,072 KRW, BPS 710,470 KRW
- 2027F: P/E 17.2x, P/B 0.5x, EV/EBITDA 6.3x, Dividend Yield 2.7%, ROE 2.9%, EPS 21,116 KRW, BPS 736,302 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 69.72T KRW, Operating Profit of 2.64T KRW, Controlling Net Profit of 1.49T KRW
- 2027F: Revenue of 70.10T KRW, Operating Profit of 3.03T KRW, Controlling Net Profit of 1.75T KRW
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Consolidated operating profit came in at 13.0B KRW (-98.0% QoQ), significantly missing market consensus of 398.0B KRW.
- Parent Steel: Shipment declines and higher energy/miscellaneous costs weighed on operating profit at 337.0B KRW (-42.4% QoQ).
- Overseas Steel & Subsidiaries: Overseas steel plunged to an operating loss of -111.0B KRW due to impairment/loss recognitions from the Zhangjiagang sale. POSCO E&C posted a 195.0B KRW operating loss on Shin-Ansan line costs, and battery materials losses widened following the expiration of prior inventory valuation gain reversals.
- 1Q26 Earnings Outlook:
- Consolidated operating profit is projected to rebound sharply to 523.0B KRW (+4,047% QoQ).
- Turnaround to operating profit at overseas steel and POSCO E&C, coupled with seasonal power strength (higher SMP) at POSCO International, will lead group recovery.
- Parent steel operating profit is projected to recover to 388.0B KRW (+15.2% QoQ) on volume recovery and the removal of one-off expense effects (despite raw material cost inflation compressing roll margins), while battery materials post minor sequential improvements.
- Industry & Commodity Supply Restructuring:
- Steel: Short-term rebound drivers include potential 1Q domestic price hikes, weaker import price competitiveness from FX depreciation, and seasonal demand ahead of the March Two Sessions.
- Energy Materials: Visible supply-side restructuring—such as the revocation of 27 mining licenses in Yichun and the Jianxiawo mine suspension in China (lithium), along with Indonesian nickel ore quota cuts—is driving price rebounds alongside strong ESS demand, with low-cost Argentine brine Phases 1 and 2 expected to drive significant mid-term gains upon full operation.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated materials enterprise that has decisively cleared its operational trough—marked by the conclusion of large divestment losses at China Zhangjiagang and upfront construction provisions—and is now entering a pronounced 1Q turnaround phase supported by upstream commodity supply rationalization and subsidiary profit normalization. This perspective places greater analytical significance on the elimination of structural loss burdens and the valuation upside in battery materials unlocked by lithium/nickel mine discipline and Argentine brine commercialization, rather than sluggish macro demand trends in global steel markets.
To verify whether this investment thesis continues to materialize, investors should monitor the final completion of the Zhangjiagang divestment in 1Q, the sustained quarterly profitability of POSCO E&C and overseas steel units, the actual pass-through of 1Q domestic steel price hikes, and the durability of lithium/nickel price recoveries alongside the operational ramp-up timeline of Argentine brine Phases 1 and 2. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
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