[Click eStock] "POSCO Future M, Q3 Slump... Industry Improvement Expected in Second Half of Next Year"

Meritz Securities stated on the 31st that POSCO Future M recorded poor performance in the third quarter due to losses in the cathode material segment, and expects the industry recovery to be possible only after the first half of 2025. The investment rating is 'Hold' with a target price of 270,000 KRW.

Researcher Noh Woo-ho said, "POSCO Future M posted sales of 922.8 billion KRW and an operating profit of 1.4 billion KRW in the third quarter," adding, "The operating profit fell short of the expected 19.2 billion KRW and our forecast of 17 billion KRW due to a negative evaluation loss of 22 billion KRW in the cathode material segment."

He explained, "This was due to the energy materials segment, a key investment point for the company, posting poor operating results for consecutive quarters. Unlike competitors, cathode materials maintained steady shipments to customers in the Americas, but sales of N65 to Europe were sluggish due to a decline in market share of the end customers."

Although guidance changes are positive, mid- to long-term facility investments (capacity) have been revised downward.

Researcher Noh said, "It is positive that the shipment volume guidance for NCA sales in 2025 was set to increase by 40% compared to the previous year, but considering the somewhat conservative operating status of existing customers, we estimate cathode material shipments to rise by 31% year-on-year."

He continued, "The company maintains its investment stance with mid-term production capacity at 185,000 tons in 2024 and 315,000 tons in 2025-26. However, the production capacity target of 1 million tons of cathode materials presented at the 2023 'Value Day' suggests a downward revision of 40% compared to the plan, indicating a return from overinvestment to realism." This trend aligns with the EV demand and battery cell manufacturers' pace adjustment of production capacity.

Researcher Noh also added, "We judge the timing of industry recovery to be after the first half of next year. While the company's top-line growth is positive, the continued slight decline in upstream prices and reduced potential for operating leverage effects mean that we do not consider the current period as a buying opportunity."

This content was produced with the assistance of AI translation services.