[Click eStock] "POSCO Holdings, New Business Slump Expected to Continue"

Lithium Market Downturn and Tariff Risks: Double Whammy

Posco Holdings is expected to continue facing sluggish performance in its new battery business. Analysts predict delayed profitability due to worsening market conditions and increasing tariff risks.

On the 10th, KB Securities lowered Posco Holdings' target stock price by 10.8% to 330,000 KRW, citing these factors. The previous day's closing price was 249,500 KRW. The investment rating of 'Buy' was maintained.

For the first quarter of this year, earnings are forecasted at 18.022 trillion KRW, with an operating profit of 546 billion KRW, representing decreases of 0.2% and 6.4% respectively compared to the same period last year. These figures are expected to fall short of market consensus. The steel division is estimated to have worsened profitability compared to the previous quarter due to increased raw material costs driven by a high exchange rate. In the battery division, ongoing stabilization of key raw material prices is expected to result in continued losses. However, the infrastructure division is anticipated to improve profitability compared to the previous quarter as one-time expenses disappear.

If large-scale investments proceed, future earnings may temporarily stagnate. Posco Holdings is currently considering investments in India and the United States for the steel division, and in Latin America for the lithium division. Even if asset securitization worth 1.5 trillion KRW is carried out by the end of this year, if all investments proceed, there is a high possibility of negative impacts on the balance sheet.

The steel market is expected to gradually improve. On the supply side, China's production cuts and the domestic anti-dumping effects on thick plate and hot-rolled steel can be anticipated. It is also analyzed that steel demand may increase due to economic stimulus following the presidential election.

Choi Yong-hyun, a researcher at KB Securities, stated, "It is necessary to share priorities regarding investment plans and increase visibility on future plans. While the steel division is expected to see profit growth due to market improvement effects, the battery division is likely to experience delayed profitability due to worsening market conditions and tariff risks."