[Edaily Reporter PARK MIN ] On the 21st, DS Investment & Securities analyzed that POSCO FUTURE M(003670)has entered a phase of upward earnings momentum by proactively securing production capacity through large-scale orders for lithium iron phosphate (LFP) cathode materials and the conversion of its ternary battery production lines to LFP. The firm maintained its “Buy” investment rating and target price of 290,000 won. This represents an upside potential of 62.7% compared to the previous trading day’s (October 20) closing price of 178,200 won.

Choi Tae-yong, an analyst at DS Investment & Securities, stated in a report published that day, “Orders for LFP cathode materials and mass production have both materialized within two months,” adding, “With orders of 80,000 metric tons from SK On in September and 400,000 metric tons from SAMSUNG SDI CO.,LTD. in October, the company has secured an annual average volume of 100,000 metric tons.” He continued, “During the tour on October 20, we confirmed pilot production at the first converted line (15,000 metric tons), which will begin mass production in December,” and assessed, “The annual average order volume of 100,000 metric tons effectively means that the company has already filled its LFP production capacity (CAPA) of over 100,000 metric tons upon the full conversion of the Pohang Phase 2-2 facility.”

POSCO FUTURE M’s expansion of LFP production capacity is being pursued not through new construction but by converting existing ternary battery lines. Researcher Choi explained, “Line conversion takes 6 to 7 months and costs less than 20 billion won per 15,000 metric tons, allowing us to respond to additional orders without the need for new construction,” adding, “Once the Gwangyang Phase 5 line is converted, we will secure up to 170,000 metric tons.”

Regarding the strategy to prioritize the conversion of downstream process lines, Analyst Choi assessed, “Prioritizing the conversion of the downstream LFP manufacturing process is a choice designed to respond most quickly to the supply gap expected in 2027, when there will be a shortage of qualified LFP cathode materials.” He continued, “Since the ‘Non-PFE’ designation is based on the sintering process, converting only the downstream process will still meet the qualification requirements,” noting, “The conversion is only possible on the recently completed line (100,000 metric tons) equipped with a 65-meter sintering furnace; it is not feasible on typical ternary lines with 45–50-meter furnaces.”

Regarding medium- to long-term cost competitiveness, the firm analyzed, “Based on the POSCO Group’s vertical integration, the company aims to secure competitiveness against China by 2029 through the application of the ferric chloride process and the non-electrolyte process,” adding, “Lithium comes from POSCO Holdings’ salt lake in Argentina, and iron comes from the Pohang and Gwangyang steelworks. The only raw material that must be sourced externally is phosphate.”

DS Investment & Securities projected that POSCO FUTURE M(003670)would post annual revenue of 3.055 trillion won and operating profit of 90 billion won in 2026. It further forecast that in 2027, the company would record consolidated revenue of 4.238 trillion won and operating profit of 197 billion won, marking significant year-over-year growth.

In particular, the firm analyzed that LFP will become the core driver of earnings growth starting in 2027. Shipment volumes are expected to increase from 1,000 metric tons in 2026 to 50,000 metric tons in 2027 and 95,000 metric tons in 2028. The firm projected that the share of LFP within the cathode material market (forecast) would expand from 1% in the fourth quarter of this year to 35% in the fourth quarter of 2027.

Researcher Choi emphasized, “One of the three major domestic cell manufacturers has yet to place an LFP order, and there is ample capacity for line conversion,” adding, “The company is also the only supplier outside of China capable of mass-producing synthetic graphite for anodes, so there is a high likelihood of securing additional orders as its performance normalizes. It is the most noteworthy among materials companies.”