Market: KOSPI (005490)
Brokerage : Shinhan Securities
Analyst : Gwang-rae Park
Investment Rating : BUY (Maintained)
Target Price : 490,000 KRW (Lowered)
Core Momentum : The first quarterly profitability of POSCO Argentina verifies actual earnings generation from the lithium business, while strong non-steel divisions support a structural earnings recovery and valuation re-rating.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Maintained BUY rating with a lowered target price of 490,000 KRW (down 9.3% to reflect an ~8% reduction in operating/pre-tax profit estimates), representing a 56.8% upside from the current share price of 312,500 KRW.
- Key Valuation Multiples:
- 2026F: P/E 14.3x, P/B 0.4x, EV/EBITDA 6.6x, Dividend Yield (DY) 3.2%, ROE 3.1%
- 2027F: P/E 10.9x, P/B 0.4x, EV/EBITDA 5.8x, Dividend Yield (DY) 3.2%, ROE 3.9%
- 2028F: P/E 9.1x, P/B 0.4x, EV/EBITDA 5.3x, Dividend Yield (DY) 3.2%, ROE 4.5%
- Annual Financial Forecasts:
- 2026F: Revenue of 73.78T KRW, Operating Profit of 3.18T KRW (+74.1% YoY), Controlling Net Profit of 1.74T KRW
- 2027F: Revenue of 76.51T KRW, Operating Profit of 3.93T KRW (+23.4% YoY), Controlling Net Profit of 2.28T KRW
- 2028F: Revenue of 79.56T KRW, Operating Profit of 4.77T KRW, Controlling Net Profit of 2.72T KRW
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Review: Consolidated operating profit reached 819.0B KRW (+15.8% QoQ), exceeding market consensus (729.9B KRW), driven by solid contributions from non-steel units including POSCO International, Lithium, and E&C.
- Steel Segment Performance:
- Standalone steel operating profit recorded 274.0B KRW (+28.6% QoQ).
- Carbon steel ASP rose by 42,000 KRW/ton, outpacing raw material index increases (+6%) to widen product spreads.
- Strategic product sales proportion expanded to 27.5% (+0.2%p).
- Overseas steel operating profit stood at 94.0B KRW (+8.0% QoQ), achieving profitability through domestic sales expansion and mix enhancements in automotive and electrical steel despite unfavorable export environments.
- Lithium Segment Dynamics:
- POSCO Argentina achieved its first profitable quarter driven by operational stabilization and shipment growth despite offering an initial ~10% discount prior to customer qualification.
- Pilbara Lithium Solution reduced operating loss to -1.0B KRW (vs. -3.0B KRW in 1Q).
- Medium-Term Drivers: The divestment of low-margin overseas steel subsidiaries combined with expected 2027 sales of ~40,000 tons from POSCO Argentina (operating margin in the 20% range) are factored into mid-term forecasts.
📝 Editor’s Comment (Perspective)
The analyst views POSCO Holdings not merely as a traditional cyclical steelmaker, but as an evolving materials and infrastructure group proving tangible earnings generation from its lithium assets and diversified non-steel portfolio. This perspective places greater emphasis on structural operational stabilization in lithium production and qualitative portfolio optimization through the restructuring of low-margin assets over short-term commodity price volatility.
To verify whether this investment thesis continues to materialize, investors should monitor the realization of POSCO Argentina’s target sales volume of approximately 40,000 tons with an operating profit margin in the 20% range following customer qualification, as well as the profitability enhancement in the steel division resulting from the divestment of low-margin overseas subsidiaries. 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.
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