[Click e-Stock] "POSCO Holdings to Be Driven by Lithium in Second Half...A Buying Opportunity at Low Prices"

KB Securities Maintains "Buy" Rating and Target Price of 533,000 Won

On July 6, KB Securities maintained its "Buy" investment rating and target price of 533,000 won for POSCO Holdings. This suggests a potential upside of 66.6% compared to the closing price of 320,000 won on July 3.

POSCO Center, Gangnam-gu, Seoul

On July 7, KB Securities analyst Choi Yonghyun stated, "The short-term earnings slump has already been priced in, and considering expectations for improved performance in the second half of the year and visible results in high-profit businesses, there is potential for a re-rating, making this an attractive entry point." Reflecting the short-term steel industry downturn and the medium- to long-term improvement in lithium and energy earnings, the company revised its operating profit estimates for this year down by 10.1% and for next year up by 8.0%.

Second-quarter operating profit is expected to be 692 billion won, which is slightly below the consensus (the average forecast by securities firms). For the steel segment, both product prices and raw material costs are rising, limiting improvements in the spread (the difference between product prices and costs), with operating profit estimated at 354 billion won. In contrast, the infrastructure segment is expected to post 384 billion won in operating profit, driven by the production increase at Senex and the benefits of palm expansion. The secondary battery materials segment is expected to continue to post a small operating loss of 11 billion won.

The steel industry faces difficulties due to delayed product price hikes, increased coking coal prices, and the impact of a strong won. However, analyst Choi expects, "Automotive product price hikes will be implemented in the third quarter, and coking coal prices, which already reflect supply disruption premiums, will stabilize downward," predicting that spreads will gradually improve starting in the third quarter.

From the second half of the year, rapid improvement in the lithium segment's performance is expected. At its Investor Day, POSCO Holdings presented a 2028 all-in cost for POSCO Argentina of around $11,000. Once operating at full capacity, annual operating profit is expected to be around 500 billion won. Analyst Choi added, "Current cost levels are higher than the target due to factors such as customer certification and long-term contracts, but cost reductions will continue," and concluded, "The outlook will only get better from here."

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