DS Investment & Securities confirms announcement of first order for POSCO FutureM LFP cathode material… Expectations for additional orders remain valid

DS Investment & Securities said on the 23rd that POSCO Future M [003670] made its first official announcement of orders related to lithium iron phosphate (LFP) cathode materials and that “expectations for additional orders are valid.”

Researcher Taeyong Choi said, “On the 22nd, POSCO FutureM announced a contract with SK On to supply LFP cathode materials worth KRW 1.0742 trillion from 2027 to 2029. The contract volume is 77,000 tons based on a selling price of KRW 14,000 per kg, or 26,000 tons per year.”

He pointed out, “With this, the cathode material customers become all three domestic companies, with LG Energy Solutions, Samsung SDI, and SK On added.”

LFP batteries have lower output than ternary batteries such as nickel, cobalt, manganese (NCM) and nickel, cobalt, aluminum (NCA), but their strengths are price competitiveness and long lifespan, and demand is expanding due to the recent expansion of artificial intelligence (AI) data centers.

Researcher Choi said, "This contract is an estimated volume contract with no minimum purchase clause. The supply volume is determined by SK On's performance in receiving U.S. energy storage system (ESS) orders, so SK On's order announcement is an indicator of performance confirmation."

He added, "Samsung SDI, a candidate for additional orders, has increased its North American ESS potential production capacity (CAPA) to up to 66 gigawatt hours (GWh) through the sole operation of Synergy Cells. C&P Advanced Materials, a joint venture with a 20% stake, is the primary channel for Samsung SDI's additional procurement, and there is also the possibility of direct orders from POSCO Future M's own line."

However, due to the influence of the won/dollar exchange rate, sales and operating profit in the third quarter of this year are expected to be KRW 797 billion and KRW 19.9 billion, down 2.9% and 63.4% from the same period last year, falling below the consensus (market average forecast).

DS Investment & Securities maintained a ‘buy’ investment opinion and a target stock price of 290,000 won for POSCO Future M. POSCO Future M's current stock price is 184,200 won based on the regular market closing price of the previous trading day.