[Click eStock] "POSCO Chemical, Sales Growth Centered on Cathode Materials... Target Price Up"

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[Asia Economy Reporter Kwon Jae-hee] IBK Investment & Securities maintained a 'Buy' rating on POSCO Chemical on the 25th and raised the target price to 220,000 KRW.

POSCO Chemical's Q3 sales reached 1.053 trillion KRW, and operating profit was 82 billion KRW, representing increases of 108.6% and 159.9% respectively compared to the same period last year. This strong performance also surpassed market consensus estimates of 838 billion KRW in sales and 56 billion KRW in operating profit. By segment, cathode materials sales were 659 billion KRW, anode materials 68 billion KRW, refractory manufacturing 117 billion KRW, and lime chemicals 204 billion KRW.

Researcher Lee Hyun-wook of IBK Investment & Securities analyzed, "The main driver of external growth was cathode materials, with a 25% increase in shipments quarter-on-quarter due to increased deliveries for electric vehicles (EVs) and new sales of ESS. Regarding pricing, the price of N65, which accounts for 85% of cathode material volume, rose 27% compared to the previous quarter."

POSCO Chemical is expected to deliver similar performance in Q4 as in Q3. Q4 sales are projected at 1.058 trillion KRW and operating profit at 72 billion KRW, representing increases of 96.8% and 250.2% year-on-year respectively. With the cathode material plant operating rate remaining high, Q4 sales are expected to be on par with Q3, while operating profit is forecast to decline due to spread contraction. Although there are concerns about price declines in Q4, the continuous rise in lithium prices is expected to limit the extent of cathode material price decreases.

Researcher Lee stated, "POSCO Chemical is steadily investing through vertical integration and expanding cathode material and precursor capacity based on actual demand. The anode materials segment is gradually gaining attention, and there is momentum for securing additional customers, which is noteworthy as POSCO Chemical can meet the minimum ratio required by the US IRA legislation faster than competitors."

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