By Kwanwoo Jun


Posco Holdings Inc.'s shares rallied Friday amid market expectations that it would return to a profit in the first quarter after a flood-damage recovery and expand its promising battery-materials business.

Shares of the South Korean steelmaking giant rose as much as 15% to 392,000 won in morning trading, putting the stock on course for its sharpest daily percentage gain in more than two decades, according to FactSet. The benchmark Kospi was 1.0% higher.

Retail investors pushed the stock higher recently, remaining as net buyers for an eighth consecutive session Thursday, Korea Exchange data showed.

Posco is expected to post an operating profit of KRW534 billion ($411.7 million) in the first quarter after a KRW425 billion loss in the previous quarter, with much of its one-off damage repair costs being recognized previously, Seoul-based Hyundai Motor Securities analyst H.W. Park said in a recent research note.

With operations returning to normal early this year at its main steel mill hit by the September storm in South Korea, the company likely boosted its steel output to 8.2 million metric tons in the first quarter from the prior quarter's 7.5 million tons, he said.

Posco also stands to gain from the continued expansion of its battery-material business. It targets annual production of 300,000 tons of lithium hydroxide, good enough to make batteries for about eight million electric vehicles, by 2030, NH Investment & Securities analyst Rhee Jae-kwang said in a recent note.

Posco recently changed the name of affiliate Posco Chemical Co. to Posco Future M to focus more on the fast-growing business of producing battery materials such as cathode and anode products.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

03-31-23 0120ET