1. What Happened?
Chosun Refractories signed a $560 million supply contract with POSCO on September 24, 2025. The contract will run for one year, from October 1, 2025, to September 30, 2026. This represents a significant portion (14.91%) of Chosun Refractories’ 2024 annual revenue.
2. Why Does It Matter?
This deal offers a crucial opportunity for Chosun Refractories to rebound from a sluggish first half of 2025. The substantial $560 million contract is expected to boost not only revenue but also operating profit and net income. Securing a stable revenue stream also sends a positive signal to investors, potentially driving stock price momentum.
3. What’s the Likely Impact?
Positive Aspects:
- Increased revenue and improved profitability
- Enhanced cash flow
- Strengthened relationship with a key client
- Potential for upward stock price movement
Potential Risks:
- Increased dependence on POSCO
- Pressure on profit margins due to rising raw material prices
- Potential for unforeseen issues during contract execution
- Possibility of a gap between market expectations and actual profits
4. What Should Investors Do?
Investors should carefully consider the following:
- Review the specific terms of the contract and projected profit margins.
- Assess Chosun Refractories’ cost management capabilities.
- Consider the likelihood of additional contracts with POSCO.
- Analyze the performance and potential synergies of other business segments beyond refractories.