Shinhan Investment Securities maintained its buy recommendation and target price of W490,000 for POSCO Holdings (KOSPI: 005490) on the 1st. Based on the closing price of W306,500 on 30th September, the implied upside to the target stands at 59.9%.
In a report published that day, analyst Park Kwang-rae forecast that POSCO Holdings would post consolidated operating profit of W804.5bn in the third quarter of 2026, down 1.8% quarter-on-quarter — broadly in line with the market consensus of W808.7bn. An improvement in the core steel business is expected to be offset by weaker contributions from POSCO International and the secondary battery materials division.
Within the steel segment, POSCO's standalone operating profit is projected at W394.6bn, up 44.0% from the previous quarter. The firm attributes this to front-loading of production and sales ahead of blast-furnace maintenance works scheduled for the fourth quarter, with total sales volume estimated at 8.52m tonnes, up 1.9%. However, recent won appreciation is expected to weigh on export average selling prices, limiting per-tonne price gains to below the previously assumed W30,000. The benefit of lower raw-material costs is expected to feed through only in the fourth quarter, given a two-to-three month inventory lag.
In the lithium segment, POSCO Argentina's first plant is expected to operate at around 70% capacity, generating results close to break-even. By contrast, Pilbara Lithium Solutions faces the prospect of widening losses: after depleting low-cost spodumene inventory, it is now sourcing the mineral at effectively 100% from higher-priced stock. The infrastructure segment — represented primarily by POSCO International — is also expected to see earnings decline quarter-on-quarter, as the one-off cost-recovery effect from Myanmar operations, which drove record quarterly operating profit of W429.0bn in the second quarter, normalises.
These near-term pressures sit against a backdrop of sharp and sustained earnings deterioration at the group level. POSCO Holdings' consolidated operating profit peaked at W9.24tn in 2022, before falling steeply to W4.85tn in 2023, W2.17tn in 2024, and W1.83tn in 2025. Return on equity collapsed from 14.0% to 1.2% over the same period. Shinhan forecasts a recovery to W3.09tn in operating profit for 2026 — yet even this rebound would represent barely a third of the 2022 peak.
The share price has tracked this deterioration faithfully. The stock's 52-week low of W263,000 is roughly half its 52-week high of W535,000. Over the past month, shares have fallen 9.3%, underperforming the KOSPI benchmark by 10.0 percentage points.
Park identifies the "realisation of lithium profits" as the pivotal condition for a re-rating of the shares. His argument is that the moment POSCO Holdings' substantial completed lithium investments begin generating meaningful earnings on the income statement will serve as the trigger for a sustained share-price recovery. Shinhan projects that return on equity will gradually recover from 1.2% in 2025 to 4.0% by 2028.
Yet this outlook carries meaningful risks. It remains uncertain how much rising production volumes and cost reductions can offset persistently weak spot lithium prices. The structural problem of high-cost raw-material inputs at Pilbara Lithium Solutions is unlikely to be resolved quickly. The secondary battery materials division is forecast to narrow its operating loss to W10.3bn in 2026, a considerable improvement on the W44.1bn loss in 2025, but a return to profitability is not anticipated until 2027 at the earliest.
Using a sum-of-the-parts (SOTP) valuation, Shinhan values the steel business at W27.00tn, based on an EV/EBITDA multiple of 5.2 times. The green infrastructure division is valued at W7.79tn and the green future materials division at W1.24tn, with a 50% discount applied to each to reflect execution uncertainty. Adding net cash on a standalone basis of W3.13tn yields an aggregate intrinsic value of W39.16tn, implying a fair value per share of W494,487.
The stock currently trades at 0.4 times book value — near its historical trough. On a 12-month forward price-to-book basis, the shares are approaching the lower bound of their historical trading range, which offers some valuation support and limits further downside. Nevertheless, a depressed price-to-book ratio is not, by itself, a reliable buy signal.
One additional consideration for income-oriented investors: POSCO Holdings' dividend pay-out ratio surged from 69.2% in 2024 to 115.0% in 2025, as the company maintained its dividend per share of W10,000 even as net profit shrank sharply. With a recovery in operating profit expected in 2026, the pay-out ratio is forecast to normalise to a more sustainable 40.3%.