Market: KOSPI (005490)
Brokerage : Kiwoom Securities
Analyst : Jong-hyung Lee
Investment Rating : BUY (Maintained)
Target Price : 640,000 KRW (Raised)
Core Momentum : With monthly profitability achieved at POSCO Argentina Phase 1 and the upcoming completion of Phase 2 in October, structural lithium turnaround combined with 2H steel spread recovery is projected to drive earnings momentum.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained BUY rating and Sector Top Pick, raising the target price to 640,000 KRW (applying a 12mf PBR of 0.9x from 2H23) to reflect the structural turnaround in the lithium business and expected 2H operational recovery (base share price at 506,000 KRW).
- Key Valuation Multiples:
- 2026F: P/E 24.2x, P/B 0.72x, EV/EBITDA 8.3x, ROE 3.0%, Operating Margin 4.2%, Net Debt Ratio 23.9%, BPS 688,597 KRW, EPS 20,889 KRW, Dividend Yield 3.3%
- 2027F: P/E 18.5x, P/B 0.69x, EV/EBITDA 7.7x, ROE 3.8%, Operating Margin 5.2%, Net Debt Ratio 24.4%, EPS 27,325 KRW
- Annual Financial Forecasts:
- 2026F: Revenue of 71.53T KRW, Operating Profit of 3.02T KRW, EBITDA of 7.09T KRW, Pre-tax Profit of 2.60T KRW, Controlling Net Profit of 1.69T KRW (+158.4% YoY)
- 2027F: Revenue of 74.48T KRW, Operating Profit of 3.85T KRW, EBITDA of 7.77T KRW, Pre-tax Profit of 3.40T KRW, Controlling Net Profit of 2.21T KRW (+30.8% YoY)
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated operating profit reached 707.0B KRW (+5,474% QoQ, +24% YoY), significantly outperforming consensus (595.0B KRW) and Kiwoom’s estimate (574.0B KRW).
- Battery Materials Segment: Operating loss narrowed by ~150.0B KRW (from -157.0B KRW in 4Q25 to -7.0B KRW in 1Q26). Lithium division losses narrowed by 82.0B KRW QoQ on price and utilization increases, while POSCO Future M swung to an operating profit.
- Lithium Segment Dynamics: POSCO Argentina Phase 1 (25k tons) achieved an operating utilization rate in the 70% range in March, recording its first monthly operating profit since startup. Supported by carbon lithium spot price recovery to ~$25,000/ton, structural profitability is expected from 2Q onwards.
- Infrastructure & Steel: POSCO International posted record quarterly operating profit of 357.5B KRW (+35% QoQ). Standalone POSCO operating profit moderated to 213.0B KRW (-37% QoQ) due to raw material cost pressure, but overseas steel operations swung to an 87.0B KRW profit (vs. -111.0B KRW in 4Q25).
- Outlook & Capacity Expansion:
- Rising domestic flat steel distribution prices since March are expected to support gradual earnings improvement in core steel from 2H.
- Phase 2 (25k tons) construction in Argentina is scheduled for completion in October 2026, setting up structural volume and revenue expansion from 2H27.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings as an integrated industrial and materials enterprise turning the corner on new growth engines (battery materials) driven by lithium price rebounds and operational ramp-up, while passing the profitability trough in its core steel division supported by overseas turnaround and domestic pricing power. This perspective places greater analytical weight on the structural profitability of Phase 1 lithium operations and medium-term volume expansion from the upcoming Phase 2 facility over temporary 1Q domestic steel roll-margin contraction.
To verify whether this investment thesis continues to materialize, investors should monitor the realization of quarterly operating profits at POSCO Argentina Phase 1 from 2Q alongside lithium spot price stability, the timely mechanical completion of the 25k-ton Phase 2 facility in October, and the pass-through of flat steel price hikes into standalone steel roll-margin recovery during 2H. These developments can be tracked through upcoming quarterly earnings releases, official IR presentations, and regulatory filings.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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