[Click e Stocks] "POSCO Holdings, 3Q Earnings Expected Slightly Below Forecast... Target Price Down"

On the 12th, SK Securities forecasted that POSCO Holdings' third-quarter earnings this year would slightly miss market expectations (consensus). Additionally, reflecting a decrease in the value of its subsidiary's equity, the target stock price was lowered from 700,000 KRW to 650,000 KRW. The investment opinion was maintained as 'Buy.'

Researcher Lee Gyu-ik of SK Securities explained, "POSCO Holdings' consolidated third-quarter earnings are expected to show sales of 20.6 trillion KRW, down 2.6% year-on-year, and operating profit of 1.1 trillion KRW, up 23.2%, which will fall about 10% short of the consensus on an operating profit basis." Operating profit in the steel segment is expected to decrease by 39.5% quarter-on-quarter to 617.7 billion KRW due to spread contraction, reduced sales volume caused by maintenance shutdowns at the hot-rolled and thick plate plants, and one-time labor costs. However, the researcher added, "Despite this, the consolidated earnings are expected to be favorable due to strong performance in non-steel segments."

The full contribution to earnings from the Gwangseok Lithium 2 plant, which will be completed in the fourth quarter, is expected to occur in the second half of next year. The researcher stated, "The Gwangseok Lithium 2 plant is scheduled for completion starting November and is expected to begin full-scale lithium production. Although recent high volatility in lithium prices has likely prolonged price negotiations more than anticipated, it is understood that there is no significant hindrance to procuring lithium ore on a post-payment basis and undergoing a ramp-up period after completion." He forecasted, "The full earnings contribution from the lithium business will be after the second half of next year."

Recently, the decline in lithium prices has exerted downward pressure on POSCO Holdings' stock price. The researcher noted, "Considering that the price floor for extracting lithium carbonate profitably from low-cost lithium ore is 20,000 USD per ton, and lithium carbonate prices have fallen close to this level, the pace of lithium price decline is expected to slow." He added, "Despite conservative estimates of the lithium business value, the target stock price of 650,000 KRW implies a 28.2% upside from the current price, so we maintain the 'Buy' investment opinion."