[Click eStock] "POSCO Chemical, Short-term Performance Supports Mid- to Long-term Investment Plans"

Shinhan Financial Investment "Maintains POSCO Chemical Target Price at 170,000 KRW"
Vertical Expansion Plan Becomes Crucial to Support Quantitative Growth

[Asia Economy Reporter Gong Byung-sun] There are expectations that POSCO Chemical's solid short-term performance will bolster its mid- to long-term investment plans. Its vertical and horizontal strategies also appear to be gradually expanding. Shinhan Financial Investment maintained a target price of 170,000 KRW and a 'Buy' rating for POSCO Chemical.

According to Shinhan Financial Investment on the 23rd, POSCO Chemical's short-term performance is robust. As of the second quarter, the refractory and lime divisions are expected to maintain high operating rates and margins, supported by the boom in upstream industries. Related sales are forecasted to reach 266.6 billion KRW, a 13.9% increase compared to the same period last year. The energy materials division, which faced concerns over production cuts due to the shortage of automotive semiconductors, is also expected to continue its high growth with sales increasing by 114.6% to 203 billion KRW. Researcher Jung Yong-jin of Shinhan Financial Investment explained, "In the case of cathode materials, there were no production disruptions in key models, and for anode materials, the decrease in some electric vehicle volumes was offset by demand from IT and energy storage systems (ESS)."

The short-term results are expected to lead to mid- to long-term investments. POSCO Chemical has executed aggressive investments among secondary battery material companies, supported by stable cash flow from existing businesses and backing from its parent company. It also holds the most diverse product lineup among domestic companies. Researcher Jung said, "Vertical expansion plans that can support quantitative growth will become important going forward."

For cathode materials, securing additional customers and vertical integration are key. Since the company has already secured mass production development of the next-generation cathode material, nickel-cobalt-manganese-aluminum (NCMA), there is little noise regarding product technology. Researcher Jung projected, "The results of the long-term vertical integration efforts will lead to customer diversification and profitability."

For anode materials, having already secured diversified customers, access to next-generation technologies such as artificial graphite and silicon additives is expected to be relatively more important. Mass production is anticipated around 2022?2023 at the artificial graphite production base in Pohang.