Will investors focus on POSCO Holdings Inc. amid hopes for a fundamental turnaround?

[Financial News] KB Securities said on the 7th that although the recovery in the steel industry and progress in the lithium business were slower than expected, a full-fledged improvement in the company’s fundamentals was expected from 2027, driven by results from new businesses and a reduced investment burden. It maintained its “Buy” rating but lowered its target price from 533,000 won to 430,000 won.
Choi Yong-hyun, an analyst at KB Securities, explained, “The pace of progress in the Argentina lithium business and the recovery in the steel industry were both slower than expected, so the 2026 estimate for net income attributable to controlling shareholders was lowered by 2.6%.”
Choi said, “A full-fledged improvement in earnings is expected in 2027 rather than in 2026, because fixed costs are expected in the fourth quarter as blast furnaces in the steel division undergo overhauls and utilization rates in the lithium division are ramped up.” He added, “From 2027, free cash flow is expected to turn positive as new businesses contribute more to earnings, capital expenditure is reduced, and asset monetization takes effect.”
Operating profit for the third quarter of this year is forecast at 817 billion won, with an operating margin of 4.1%, in line with market expectations. Operating profit in the steel division is estimated at 481 billion won.
Choi analyzed, “Earnings are expected to improve from the previous quarter due to the volume effect from sales of 8.5 million tonnes. As for the spread, an improvement of 2,000 won from the previous quarter is expected, as the appreciation of the won will narrow the increase in overseas selling prices.”
Operating profit in the infrastructure division is expected to reach 437 billion won, supported by increased production at Senex by POSCO International and the impact of its acquisition of a palm business. Operating profit in the secondary battery division is estimated to decline to 17 billion won from 41 billion won in the previous quarter due to seasonal weakness in the third quarter.
The lithium business is expected to have greater earnings visibility from the fourth quarter. He said, “From the fourth quarter, utilization rates in the lithium upstream segment will ramp up in earnest, improving earnings visibility. We estimate that about 80% of the first plant’s lithium hydroxide production capacity is committed under long-term contracts, while 20% is for spot sales.” However, regarding the second plant, he explained, “Demand for technical-grade lithium carbonate is already relatively high, but given that utilization is being ramped up through 2027, earnings are unlikely to rise quickly.”
Choi said, “Free cash flow is expected to turn positive from 2027, as capital expenditure will decline after peaking at about 8 trillion won in 2026, and the new business segments that have received investment to date will also begin to deliver visible results.”

[email protected] Choi Doo-sun Reporter