[Click eStock] "POSCO Future M's Profitability Defense Is Relatively Strong"

On the 24th, KB Securities evaluated that POSCO Future M has relatively well defended its profitability despite the continued slowdown in electric vehicle demand. Accordingly, they maintained a 'Buy' investment rating and a target price of 400,000 KRW.

Lee Chang-min, a researcher at Hana Securities, stated, "POSCO Future M's sales for the first quarter of 2024 are estimated to be 1.13 trillion KRW, a 0.6% decrease compared to the previous year, while operating profit is expected to surge 124% to 45.3 billion KRW, exceeding consensus."

He explained, "In the case of cathode materials, the proportion of binding contracts is relatively high, so the possibility of additional sales volume decline compared to competitors is expected to be limited," adding, "Despite the still challenging secondary battery market conditions, relatively strong performance is anticipated."

The yield of the N86 product, which had previously shown poor yield rates, has improved. Sales of the N65 product, which had sharply declined due to weak upstream demand, have temporarily recovered. Sales volume is expected to increase by about 20% compared to the previous quarter.

Lee said, "However, due to the lagging effect of the decline in lithium prices, the average selling price (ASP) is also estimated to drop sharply by 20%, resulting in sales revenue similar to the previous quarter," and forecasted, "From a profitability perspective, a margin rate in the 3% range is expected due to a 20 billion KRW inventory revaluation loss reversal effect."

He added, "Even in difficult conditions, profitability is relatively well defended," and "For the time being, POSCO Future M is expected to attract more attention in the market compared to competitors within the industry."