"Operating Profit Up 88%"... Stock with Target Price Raised by 80,000 Won [Click e-Stock]

Shinhan Investment Corp. has raised its target price for Posco Holdings from 440,000 won to 520,000 won while maintaining its "buy" investment rating.

On May 5, Park Kwangrae, a research analyst at Shinhan Investment Corp., stated, "The upward revision of the target price reflects changes in our earnings estimates."

Park explained, "The annual operating profit growth rate compared to the previous year is expected to be 88.6% this year, 21.2% next year, and 10.7% in 2028, indicating continued double-digit growth." He added, "This year, the removal of abnormal losses, including from POSCO E&C, is expected to lift profits, while from next year, the normalization of steel spreads and the full-scale contribution of lithium sales will further boost earnings."

Posco Holdings achieved monthly profitability in March as the industrial production of the first phase of the Argentina (brine lithium) plant began in earnest. Photo by Yonhap News Agency

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In the first quarter of this year, Posco Holdings' consolidated operating profit reached 707 billion won, far exceeding the market consensus of 588.6 billion won. Weakness in the steel segment was offset by strong performances in the infrastructure and secondary battery materials divisions.

The steel division recorded a separate operating profit of 219 billion won, down 34.8% from the previous quarter. Although sales volume increased, profitability declined due to rising KRW-USD exchange rates, higher shipping costs, and increased oil prices.

Conversely, the infrastructure division achieved a separate operating profit of 405 billion won, returning to profitability. This was largely driven by POSCO E&C, which posted an operating profit of 53 billion won after incurring a massive operating loss of 452 billion won last year. The secondary battery materials segment reported an operating loss of 7 billion won, but this was a significant improvement from the loss of 98 billion won in the first quarter of last year. Furthermore, as industrial production at the first phase of the Argentina (brine lithium) plant began in earnest, the company succeeded in achieving a monthly profit in March.

Park noted, "A short-term pause in the share price may occur after the recent sharp rise," but predicted, "As the lithium business turns profitable in the second quarter and profitability in the steel segment improves in the second half of this year, the share price is expected to trend upward in the mid-term."

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