POSCO Future M (003670) rose 7.62% on 31 August to ₩200,500, and nothing was filed with DART that day. The move belongs to something that happened three weeks earlier: on 6 August the company said it had agreed to supply more than 190,000 tonnes of lithium-iron-phosphate cathode to a domestic cell maker over six years starting in 2027, aimed at North American energy storage demand, with a formal contract to follow in the third quarter. ZDNet Korea and Asia Economy both reported it as the company's first large LFP order.
My view is that the market is pricing the tonnage and skipping the two questions that decide whether it matters. LFP sells for a fraction of what high-nickel cathode sells for per tonne, and this company's balance sheet is a monument to high-nickel. Those two facts have to be reconciled before ₩17.83tn of market value makes sense.
Look at what got built. Property, plant and equipment was ₩2,098.0bn at the end of FY2022. By 30 June 2026 it was ₩6,661.9bn, more than three times as large. Over the same stretch revenue went the other way: ₩4,759.9bn in FY2023, then ₩3,699.9bn, then ₩2,938.7bn in FY2025. Trailing twelve-month revenue through June is ₩2,869.3bn.
So the company now carries ₩2.32 of plant for every ₩1 of annual sales. That ratio is survivable for a business ramping into a firm order book. It is punishing for one that isn't, because depreciation runs whether the lines are loaded or not, and it is a large part of why gross margin collapsed to 1.3% in the fourth quarter of 2025.
LFP does not fix this cleanly. A cathode plant tuned for nickel-cobalt-manganese precursor chemistry isn't a drop-in LFP line, and the company said alongside the August agreement that it plans to expand LFP capacity to match further orders. That is more capital, not absorption of capital already spent. Capex has in fact been falling hard — ₩177.5bn in the second quarter against ₩534.1bn a year earlier — which reads as discipline right up until the LFP build starts.
There's a filing from 21 August that almost nobody read, and it is the most useful document on this company I've seen this year.
In August 2022 POSCO Future M signed a medium-to-long-term ESS cathode supply contract worth ₩1,051.7bn (~$751m). It ran to 23 August 2026. When the termination was disclosed in full last week, the numbers were these: ₩106,652,403,658 performed, ₩945,049,504,591 cancelled. That is 10.1% delivered against a contract equal to a quarter of FY2024 revenue. The counterparty, named only now that a confidentiality deferral lapsed, was SolarEdge Technologies Korea, and the stated reason was that the buyer terminated its ESS business outright.
Note the dates. The two sides agreed to terminate on 8 August 2025. The market learned who the customer was and how little had shipped on 21 August 2026, more than twelve months later, because the company withheld the details for commercial confidentiality. That's legal and it's common. It also means the headline number on a long-term supply agreement and the cash that eventually arrives can differ by an order of magnitude, and you may not find out for a year.
I'm not saying the LFP agreement goes the same way. The buyer is a Korean cell maker rather than an inverter company dabbling in storage, and North American ESS demand looks sturdier than it did in 2022. But the base rate here is one long-term ESS cathode contract out of one that delivered a tenth of its face value, and a piece of news reported as a win should be read against that.
The operating line is genuinely getting better. Second-quarter operating income was ₩26.7bn on ₩679.5bn of revenue, a 3.93% margin, against ₩0.8bn on ₩660.9bn a year earlier — essentially breakeven. Gross margin went from 7.5% to 13.3% across the same two quarters.
What's striking is that revenue barely moved: up 2.8% year over year. The improvement is price and mix, not throughput. Some of it is the refractories and lime business, which is quietly the steady half of this company; the ₩91.0bn refractory maintenance contract with POSCO signed on 15 July is a related-party deal that recurs annually and carries none of the volatility of cathode.
Trailing operating income is ₩59.3bn, a 2.07% margin. FY2022, the last normal year, produced ₩165.9bn on ₩3,301.9bn, a 5.02% margin. The company is not back to that, and a chemistry shift toward LFP is not the obvious route there, because LFP's whole appeal to the customer is that it's cheaper.
Trailing twelve-month net income is ₩54.1bn. Against a ₩17.83tn market capitalisation that's about 330 times earnings. Book value at 30 June was ₩4,713.6bn, so the shares change hands near 3.8 times book, and at 6.2 times trailing revenue.
Those are not multiples you argue about at the margin. They only make sense as a bet that FY2027 and FY2028 look nothing like the last three years — that the plants fill, that LFP volumes come at a price which covers depreciation, and that the FY2024 result, a ₩231.3bn net loss on a ₩431.9bn pretax loss, was the bottom of a cycle rather than a write-down of capacity the market still doesn't need.
The stock has already moved a long way on that bet. At ₩200,500 it sits 64% above its 52-week low of ₩122,100 and 32% below the ₩296,000 high.
The bear case I've laid out has an obvious hole: LFP for grid storage is a volume business, and volume is exactly what an under-loaded plant needs. If the 190,000 tonnes converts to a signed contract with a floor price and take-or-pay terms, the depreciation drag I'm pointing at gets diluted rather than deepened, and 2.07% trailing margins could move quickly.
Second, the balance sheet is not fragile in the way the earnings suggest. Total equity is ₩4,713.6bn against ₩4,891.0bn of liabilities, cash is ₩612.3bn, and second-quarter operating cash flow was positive ₩243.4bn — the best quarter in the eight on file. This company can fund an LFP build without a rights issue if it wants to.
Third, the vertical integration argument is real. POSCO group lithium and nickel upstream is worth something to a cathode maker when raw material prices move, and it is not visible in any line of the income statement I've quoted.
The formal LFP contract, when it is filed with DART as a single sale-or-supply contract disclosure (단일판매·공급계약체결), has to state a won amount and a term. Divide that amount by 190,000 tonnes and you get the implied price per tonne, and that single number tells you whether this order earns a margin or just fills a shed. Watch also whether the third-quarter report shows PP&E rising again, which would mean the LFP capacity expansion has started and the asset-to-sales ratio is going up before revenue does.
And check the annual report's segment note for what the terminated SolarEdge contract cost in write-offs, if anything. A contract that delivered 10% of its value over four years left something behind.
kstock reads DART every morning and writes up what moved — the contract, the buyback, the number that does not add up. The daily post and a Saturday roundup, by email.