POSCO Holdings: Transitioning into EV Supply Chains with Deep-Value Appeal
Key Ideas
- POSCO Holdings, a steel giant in South Korea, is transitioning towards battery materials and EV supply chains.
- Despite facing near-term profitability pressure, the company offers compelling value with its transition strategy.
- POSCO Holdings' stock trades at a low valuation of 0.5x book and ~4.7x EV/EBITDA, indicating potential for growth.
The article provides insights into POSCO Holdings, a major player in the South Korean stock market. POSCO's performance has been on a decline since 2021 due to softer steel prices and macroeconomic challenges. However, the company is strategically shifting towards battery materials and EV supply chains through a new initiative called POSCO Future M. This transition is supported by significant investments in lithium, cathodes, and green hydrogen. Despite the current profitability concerns, POSCO Holdings' stock is deemed to have deep-value appeal as it trades at a mere 0.5 times book and approximately 4.7 times EV/EBITDA. This suggests that if the company's transition strategy succeeds, there is potential for significant growth in the future.