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Growth momentum to be sustained

4Q25 review: OP growth driven by improved E&P and palm oil earnings

For 4Q25, POSCO International reported revenue of W7.83tr (-1.4% YoY) and operating profit of W265.5bn (+83.6% YoY; slightly above the consensus of W241bn). Operating profit in the energy division came in at W144.9bn, led by the Myanmar (W62.4bn) and Senex (Australia; W29.3bn) gas fields. Operating profit from Senex climbed 117% YoY (vs. W13.5bn in 4Q24), supported by the ramp-up of new capacity (threefold expansion). Meanwhile, operating profit from the power generation unit remained weak (W2.5bn) amid lower SMP prices.

Materials operating profit expanded to W130.6bn, with well-balanced contributions from steel trading (W35.4bn) and the Indonesian palm oil business (W15.4bn). The inclusion of earnings from the plantation operator acquired at end-2025 (PT. PAR) provided a meaningful boost. Earnings in the motor core unit also continued to improve, helped by mix improvements centered on hybrid vehicles.

Resource development projects expanding; medium/long-term growth intact

We expect POSCO International to secure continued growth momentum by investing more than W1.5tr annually going forward. In particular, 2026 should mark the start of more aggressive asset expansion and operational efficiency improvement as the firm pushes to evolve into a platform player. The resources development unit should deliver robust growth, supported by production expansion at Senex and the acquisition of North American upstream assets (up to US$1bn). In addition, following new palm plantation acquisitions in Indonesia, crude palm oil sales volumes should jump 189% YoY to 550,000 tonnes.

Over the longer term, earnings growth should be driven by: 1) US rare earth projects under an MOU signed last year (earnings contribution expected from 2027); 2) uranium supply chain initiatives; and 3) the Alaska LNG project, for which an FID is expected in 2026 and commercial operations are targeted for 2030. The motor core unit should also see visible earnings improvement from 2027, following the ramp-up of the Poland plant.

Maintain Buy and TP of W73,000

We maintain our Buy rating on POSCO International with a target price of W73,000. Continued growth in core businesses?led by the energy segment?and a high dividend payout ratio (around 50%) provide sufficient grounds for further valuation upside at the current levels (12-month forward EV/EBITDA of 9x).