iM Securities has maintained a "Buy" rating on POSCO Holdings (KRX: 005490) while cutting its target price from 480,000 won to 400,000 won. The revision reflects a deteriorating outlook for the steel industry: the brokerage has lowered the target price-to-book ratio (PBR) for the steel division from 0.5 times to 0.4 times. Based on the closing price of 300,500 won on 30 July, the implied upside to the new target stands at 33.1%.
A stronger-than-expected second quarter
POSCO Holdings posted consolidated operating profit of 819 billion won for the second quarter of 2026, up 15.9% from the previous quarter and 13.8% ahead of the one-month market consensus of 720 billion won as of 30 July — a notable earnings surprise. Revenue rose 7.7% quarter-on-quarter to 1.9259 trillion won, while net profit attributable to controlling shareholders climbed 32.1% to 617 billion won.
The outperformance was driven largely by subsidiaries rather than the parent steelmaker itself. The parent company's operating profit rose 28.5% quarter-on-quarter to 274 billion won, but more striking were the contributions from Posco International, the group's trading arm, and the battery-materials division. Posco International recorded a quarterly record operating profit of 429 billion won, boosted by capacity expansion at the Senex gas project in Australia and higher cost-recovery income. Posco Argentina, which produces lithium from brine deposits in the South American salt flats, returned to profit for the first time in a quarter despite the absence of a provision reversal that had flattered earlier results — a sign that operations are stabilising. Crucially, the battery-materials division as a whole swung into the black for the first time.
Third quarter: a modest step back
iM Securities forecasts consolidated operating profit of 800 billion won for the third quarter, a slight 2.7% sequential decline. The parent company's operating profit is expected to improve materially to 418 billion won (up 52.5% quarter-on-quarter), supported by wider carbon-steel rolling margins following price increases on key products such as automotive sheet, and stronger volumes. Offsetting factors include lower cost-recovery income at Posco International, the impact of scheduled major maintenance at Posco Argentina, and persistent weakness in lithium prices.
Structural shift, or temporary reprieve?
The significance of the second-quarter results lies in what they may signal about the group's longer-term trajectory. The battery-materials division had accumulated losses for several years since 2022; its first quarterly profit is difficult to dismiss as a one-off. Posco Argentina ran losses for seven consecutive quarters from the first quarter of 2024 through the first quarter of 2026 before returning to profit — suggesting that its brine-based lithium operations are approaching genuine cost competitiveness, independent of any recovery in lithium prices.
Lithium prices themselves remain a variable to watch. Prices fell again after CATL, the dominant Chinese battery maker, announced in June the resumption of output at its Jianxiawo mine. iM Securities argues that further downside is limited, pointing to the spread of resource nationalism in producing countries such as Zimbabwe and rising energy costs for hard-rock lithium miners in Australia as potential supply constraints. Even so, lithium carbonate prices have already fallen from around 200,000 yuan per tonne at the start of 2024 to roughly 150,000 yuan per tonne now, and any meaningful rebound remains uncertain. Much will depend on Chinese battery producers' output decisions and the pace of recovery in global electric-vehicle demand.
Steel: a heavier cloud
The steel industry presents a gloomier picture. Fixed-asset investment growth in China's steel-consuming sectors has turned negative, falling to minus 5.7% — close to its worst level outside the peak of the COVID-19 pandemic. Infrastructure investment growth is also negative, at minus 2.4%. Chinese steelmakers are cutting output in response to margin pressure, but without a recovery in downstream demand, any improvement in the supply-demand balance will be slow. The American market adds further uncertainty: hot-rolled coil prices in the United States have risen to $1,300 per tonne following the imposition of tariffs, a level at which imported steel may begin flowing back into the market, raising the prospect of a correction in the second half of the year.
Valuation
As of 30 July, POSCO Holdings' market capitalisation stood at approximately 23.8 trillion won, roughly 44% below its 52-week high of 535,000 won. iM Securities estimates that the lithium business alone accounts for around 10 trillion won of that market value. The stock trades on a forward price-to-earnings ratio of 13.3 times and a PBR of 0.4 times for 2026 — at the lower end of the historical valuation range for large-cap steelmakers. The fact that iM Securities has cut its target price for the second time in quick succession — from 480,000 won on 12 June to 400,000 won now — implicitly acknowledges that near-term share-price catalysts are thin. Green shoots of earnings recovery are visible, but with both steel markets and lithium prices unsettled simultaneously, the pace of any re-rating remains hard to predict.
iM Securities forecasts POSCO Holdings' consolidated operating profit at 2.9350 trillion won for 2026, a 60.7% increase from 1.8270 trillion won in 2025. It projects a gradual rise to 3.1300 trillion won in 2027 and 3.3440 trillion won in 2028. The annual dividend is expected to be maintained at 10,000 won per share, implying a yield of approximately 3.3%.