Posco Group's market cap up 50% this year

Posco Center in Gangnam-gu, Seoul (Yonhap)

Posco Group has seen an increase of more than 20 trillion won ($15.2 billion) in its market capitalization this year, buoyed by anticipated gains in its battery businesses.

According to data released by Korea Exchange on Monday, the combined market capitalization of Posco Group's listed firms came to around 63.5 trillion won as of Sunday, up by around 50 percent -- some 23 trillion won -- from early 2023.

Posco Group's market capitalization also surpassed that of Kakao, which came to 48.4 trillion won this week, up 3.92 percent from 46.6 trillion won early this year.

With the recent gains, Posco Group’s market capitalization has also become the fifth largest in the country now, pushing aside Kakao with a gap reaching over 15 trillion won.

Leading Posco Group’s latest advance were the group’s battery businesses, including Posco Future M, formerly Posco Chemical, which produces battery materials.

Posco Future M’s stock price increased by 73 percent this year after the company signed a 10-year supply deal worth 40 trillion won with Samsung SDI in late January. The company’s stock price also continued to go up in line with the US government’s announcement relating to the Inflation Reduction Act, through which the company is expected to receive tax credits for its supplies of battery materials.

Market capitalization of Posco Holdings also soared on the IRA terms. Posco Holdings currently has access to 315,000 tons of lithium ore annually in Australia, which can produce 40,000 tons of lithium. In Argentina, Posco Holdings also has access to a lithium brine of 13.5 million metric tons.

Posco Group also expects to complete construction of a lithium ore plant in Gwangyang, South Jeolla Province, which is expected to produce 43,000 tons of lithium per year.

Market experts, however, have voiced concerns over the latest surge in Posco Group’s market capitalization, saying it could be a short-term rally that other battery companies -- like EcoPro affiliates -- are on board.

Steel material maker Posco M-Tech, for example, was one of the affiliates of Posco Group, which enjoyed the upward trend in the group’s stock prices. Stock price of Posco M-Tech currently reached 32,500 won per share as of Monday afternoon, up from 7,700 won in early January.

“The latest surge in (the stock price of Posco Holdings) has been somewhat excessive,” a market researcher from Kyobo Securities said.

EcoPro shares extended a sharp rally Tuesday on its surprising triple-digit earnings growth, but market experts advised investors to be aware of overvaluation risks in the Kosdaq-listed leading rechargeable battery maker's stock price.

By Shim Woo-hyun(ws@heraldcorp.com)