Hello, this is Daily Stock.
Today, we will take an in-depth look at the current status and second-half scenarios for POSCO Holdings (005490), which is transforming into an eco-friendly future materials platform amid signs of a turnaround in the traditional steel industry.
[Image: /stdaily/uploads/202607/gen_6a5b24ef920ec7.25076974.png]
---
Key Summary
Market expectations for an improvement in South Korean steel margins (spreads) are growing, driven by the easing of low-priced steel exports from China and global supply adjustment trends.
POSCO Holdings recently made a surprise announcement regarding a plan to optimize its stakes in major listed subsidiaries—valued at around KRW 3 trillion—to secure funds for strategic investments and narrow the holding company discount.
The recovery speed of its core steel roll margins and whether the Argentine lithium business (a new growth engine) can successfully establish sustained profitability will serve as the key catalysts for a future valuation rerating.
---
Current Status Summary
Currently, the KOSPI index is trading around the 6,820.60 level, and the USD/KRW exchange rate remains at 1,490.00, keeping strong dollar pressure intact.
According to Daily Stock's proprietary Fear & Greed Index, the KOSPI is currently in the "Extreme Fear (12.4)" stage, indicating that overall market investment sentiment is significantly depressed.
Amid this sluggish macroeconomic environment, POSCO Holdings' stock price is unconfirmed for the day (the latest confirmed closing price as of July 16, 2026, is KRW 311,500).
On the positive side, supply pressures that previously weighed heavily on the market are easing, with China's crude steel and steel product output decreasing by 4.6% and 1.7% year-on-year, respectively.
Furthermore, the commercial production operating rate at Argentine Lithium Plant 1, a core secondary battery material site, is gradually ramping up, preparing to showcase the effects of portfolio diversification.
---
Financial Analysis
POSCO Holdings disclosed that it will host a conference call on July 30, 2026, to announce its Q2 earnings results.
According to the consensus of major domestic brokerages, Q2 consolidated revenue is expected to land between KRW 17.9 trillion and 18 trillion, with consolidated operating profit projected in the low KRW 700 billion range.
This is similar to the previous quarter's operating profit of KRW 707.0 billion, as solid performance from infrastructure units like POSCO International helped cushion the delayed recovery in core steel profits.
Experts expect roll margins to expand significantly starting in the second half, when raw material price stabilization and the domestic flat steel price hikes begin to fully take effect.
| Category (Unit: KRW) | Q1 2026 (Confirmed) | Q2 2026 (Consensus Forecast) | Q3 2026 (Forecast) |
|---|---|---|---|
| **Consolidated Revenue** | 17.876 Trillion | 17.900 Trillion ~ 18.060 Trillion | Expected to break past mid-18 Trillion |
| **Consolidated Operating Profit** | 707.0 Billion | 709.6 Billion ~ 757.0 Billion | 894.2 Billion (Forecast) |
| **Key Variables** | First monthly profit in Argentine lithium | Offsetting of auxiliary material & cost increases | Spread expansion driven by sales price hikes |
[Image: /stdaily/uploads/202607/gen_6a5b24f977a554.66067060.png]
---
Valuation
Currently, the average Price-to-Book Ratio (PBR) of the domestic steel industry stands at 0.29x, representing its deepest historical undervaluation.
POSCO Holdings' PBR is also a mere 0.43x, trading at a significant discount compared to the global peer average of 0.9x.
To overcome this discount, the group's board decided on a plan to optimize its holdings in major listed subsidiaries (POSCO Future M, POSCO International, and POSCO DX) to the 50% level.
They presented an innovative plan to reinvest 90% of the approximately KRW 3.6 trillion secured from these sales into high-growth strategic resources like lithium, and allocate the remaining 10% to share cancellations.
If this liquidity plan is implemented through market-friendly methods like Price Return Swaps (PRS) without diluting shareholder value, it could trigger a significant reduction in the Net Asset Value (NAV) discount rate.
---
Expert & Institutional Analysis
Securities firms analyze that POSCO Holdings now has the right conditions to shed its image as a traditional cyclical stock and be rerated as an essential "infrastructure materials platform" for the AI era.
Daishin Securities raised its target price to KRW 610,000, projecting that China's production cuts and tighter export regulations, combined with raw material cost stabilization, will structurally drive margin expansion in the second half.
Mirae Asset Securities conservatively lowered its target price from KRW 620,000 to KRW 470,000 to strictly reflect changes in subsidiary equity values and affiliates, but maintained that a relief of its undervaluation driven by earnings improvement remains highly valid.
Hana Securities noted that while short-term losses in the lithium sector were a burden in Q2, Q3 operating profit is projected to improve by over 40% year-on-year, supported by the stabilization of blast furnace raw material input costs.
[Image: /stdaily/uploads/202607/gen_6a5b25033af794.24477462.png]
---
Risk Factors
The most direct risk is that the USD/KRW exchange rate, which has surged near the 1,490.00 level, could drive up blast furnace raw material import costs and limit profitability improvements.
Additionally, the holding company's roadmap to optimize KRW 3.6 trillion worth of subsidiary shares has raised short-to-mid-term overhang concerns for those affiliates, increasing supply-demand volatility across group stocks.
If the global economic slowdown prolongs or the spot prices of lithium carbonate and lithium hydroxide weaken further, the scenario for achieving stable profitability in the secondary battery materials division could be delayed.
Furthermore, due to the sluggish recovery of the domestic construction market, it is difficult to expect an immediate, dramatic turnaround in domestic demand for section steel and structural steel products.
---
Investment Outlook Summary
POSCO Holdings is positioned at the entry point of a gradual turnaround, as its core steel business bottoms out from a harsh downturn.
The capital reallocation plan designed to resolve the holding company discount, along with the performance-linked shareholder return policy based on adjusted controlling net income, clearly reflects a commitment to boosting shareholder value.
A sensible strategy would be to closely monitor whether Q3 margin metrics expand and Argentine lithium profitability materializes as the company navigates short-term overhang issues and macro uncertainties.
---
Investor Checklist Q&A
Q1. Why are there expectations that Q2 earnings might miss market estimates?
A1. Despite rising hot-rolled steel distribution prices, the improvement in steel spreads slowed down due to the rising exchange rate and high coking coal costs, coupled with some losses from the lithium sector's high base effect.
Q2. What are the specific benefits of China's crude steel production cuts on the domestic steel market?
A2. A reduction in China's crude steel production leads to a decrease in low-priced export dumping. This relieves supply pressures in the domestic steel market and gives companies room to normalize product selling prices.
Q3. How does the policy of selling listed subsidiary stakes down to the 50% level affect the holding company and its subsidiaries?
A3. The holding company, POSCO Holdings, secures a massive strategic investment fund of about KRW 3.6 trillion to reduce its NAV discount. However, the subsidiaries subject to the stake sales may face downward stock price pressure due to overhang (potential supply glut) concerns.
Q4. How is the demand for Artificial Intelligence (AI) data centers linked to traditional steelmakers?
A4. Data centers require 20% to 30% more structural specialty steel than ordinary buildings and drive consumption of specialty steel for transformers and power distribution grids during grid expansions.
Q5. What is the core of the mid-term shareholder return policy starting in 2026?
A5. Instead of the previous dividend policy, the company is adopting a "performance-linked policy based on adjusted controlling net income," aiming for a 35% to 40% shareholder return rate to balance reinvestment with shareholder value creation.
---