[Click eStock] "Posco Chemical, Profitability Improvement Reconfirmed... Long-Term Approach"

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 26th that it reaffirmed a clear improvement trend in POSCO Chemical's profitability in the second quarter of this year, following a return to profit in the previous quarter, and raised the target stock price by 6% to 190,000 KRW with a buy investment opinion.

Hansangwon, a researcher at Daishin Securities, said, " POSCO Group's secondary battery materials business sales target is 23 trillion KRW by 2030, and the synergy creation with affiliates in terms of vertical integration is the most attractive investment point," adding, "POSCO Chemical plans to secure production capacity of 40,000 tons of cathode materials and 70,000 tons of anode materials this year, increasing to 400,000 tons of cathode materials and 260,000 tons of anode materials by 2030, and is expected to announce detailed investment plans in the second half of the year."

However, the researcher said, "even as of 2023, the high valuation with a PER (price-earnings ratio) approaching 60 times is considered somewhat burdensome, so it is recommended to approach with a long-term perspective based on a mid- to long-term strategy."

Operating profit in the second quarter of this year was 35.6 billion KRW, growing 7,774% year-on-year and meeting market expectations (34.6 billion KRW). While the steel-related business performance was similar to the previous quarter, the energy materials business (cathode and anode materials) saw profit increases due to growth in cathode material performance.

In particular, the energy materials business recorded an operating profit of 13.9 billion KRW, accounting for nearly 40% of the company's total profit contribution. It is notable that the profit scale of cathode materials began to surpass that of anode materials. For anode materials, sales decreased compared to the previous quarter due to production disruptions in electric vehicle batteries (EVB) and energy storage systems (ESS) caused by semiconductor shortages in some customers' vehicles, slightly weakening profitability.

For cathode materials, production disruption impact was limited as it was concentrated on specific customers and models, and sales increased due to an increase in average selling price (ASP) reflecting the rise in raw material (metal) prices. Profitability also confirmed a clear improvement trend, rising further following a return to profit in the previous quarter.

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