POSCO to Inject Capital to Strengthen Battery Material Subsidiaries

POSCO Holdings PKX has announced a total investment of KRW 922.6 billion (roughly $660 million) to increase capital in its rechargeable battery material subsidiaries, aiming to enhance their competitiveness and strengthen management of its key business areas. At a board meeting, POSCO Holdings approved capital injections into three rechargeable battery material subsidiaries: KRW 525.6 billion for POSCO Future M, KRW 328 billion for POSCO Pilbara Lithium Solution and KRW 69 billion for POSCO GS Eco Materials.

This move is part of the company’s strategy to prepare for significant market expansion following a slowdown in the electric vehicle sector. By finalizing major investment initiatives across its subsidiaries, POSCO Holdings seeks to bolster future competitiveness in the battery materials industry, improve financial stability and reinforce responsible management across its core operations.

POSCO Holdings plans to invest in POSCO Future M’s capital increase, acquiring the full allocation of new shares corresponding to its 59.7% ownership. On May 13, POSCO Future M held a board meeting prior to POSCO Holdings' session and approved a KRW 1.1 trillion (roughly $790 million) shareholder-allotted capital increase to secure future growth opportunities.

The proceeds from the capital increase are expected to be used by POSCO Future M to advance ongoing investments aimed at boosting production capacity for anode and cathode materials. This includes a joint cathode material plant in Canada and the expansion of existing cathode material facilities in Pohang and Gwangyang, all part of the company’s broader strategy to enhance its competitiveness in rechargeable battery materials. 

Additionally, POSCO Holdings is investing capital in POSCO Pilbara Lithium Solution and POSCO GS Eco Materials to lay the groundwork for sustainable growth in its lithium and recycling operations. These capital infusions are expected to strengthen the subsidiaries’ financial health and support their continued stable performance.

In the past year, shares of PKX have lost 39.7% compared with the industry’s 36.5% decline.

PKX’s Rank & Other Key Picks

PKX currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Idaho Strategic Resources, Inc. IDR and Hawkins, Inc. HWKN

Carpenter Technology currently carries a Zacks Rank #1. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 11.1%. The company's shares have soared 112% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Idaho Strategic Resources’ current-year earnings is pegged at 21 cents. IDR, carrying a Zacks Rank #2, surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while missing twice, with an average earnings surprise of 21.7%. The company's shares have rallied 28% in the past year.

Hawkins, which currently carries a Zacks Rank #1, beat the consensus estimate in one of the trailing four quarters, while missing thrice. In this time frame, it has delivered an earnings surprise of roughly 6.1%, on average. The company's shares have rallied 57.3% in the past year.

 

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This article originally published on Zacks Investment Research (zacks.com).

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