[Edaily Reporter kyoungeun kim ] On the 23rd, DS Investment & Securities maintained its “Buy” investment rating and target price of 290,000 won for POSCO FUTURE M(003670). This is due to expectations of expanded order intake following the company’s first order contract for lithium iron phosphate (LFP) cathode materials, despite exchange rate fluctuations.
Choi Tae-yong, an analyst at DS Investment & Securities, stated in a report, “The company has announced its first official order for lithium iron phosphate (LFP) cathode materials,” adding, “On the 22nd, it disclosed a supply contract with SK On for LFP cathode materials worth 1.0742 trillion won over a three-year period from 2027 to 2029.”
Analyst Choi explained, “This contract is a volume-based agreement with no minimum purchase clause,” adding, “Since the supply volume will be determined based on SK On’s success in securing orders for energy storage systems (ESS) in the U.S., SK On’s order announcements serve as an indicator of actual performance.”
The possibility of additional orders remains open. Analyst Choi said, “SAMSUNG SDI CO.,LTD., a candidate for additional orders, has increased its potential North American ESS production capacity (CAPA) to a maximum of 66 gigawatt-hours (GWh) through the sole operation of Synergy Cells,” adding, “For SAMSUNG SDI CO.,LTD.’s additional procurement, the joint venture C&P New Materials—in which SK On holds a 20% stake—is the primary channel, though there is also a possibility of direct orders to POSCO FUTURE M’s own production lines.”
He continued, “The 55,000 metric tons (t) of ternary batteries at the Pohang plant will increase to 87,000 t upon conversion to LFP, so the company can handle additional orders without expanding capacity,” and noted, “The 2027 forecast reflects only 60% of the volume from the two contracts (190,000 t + SK On), so the remaining 40% represents an upside factor.”
Third-quarter earnings are expected to be somewhat lackluster. Analyst Choi said, “We forecast third-quarter revenue of 797 billion won (up 17.3% from the previous quarter, down 8.9% year-over-year) and operating profit of 19.9 billion won (down 25.4% from the previous quarter, down 63.4% year-over-year),” and He explained, “As the won-dollar exchange rate fell from 1,502 won in the second quarter to 1,415 won in the third quarter, selling prices dropped immediately, while costs were still influenced by the previous quarter’s exchange rate due to inventory carryover.” These figures fall 25.7% short of the market consensus (operating profit of 27 billion won).