Shinhan Investment Corporation analyzed on the 24th that to reassess the stock price of Solus Advanced Materials, it is necessary to improve the revenue of the copper foil. It adjusted the target stock price down from the previous 23,000 won to 15,000 won while maintaining an investment opinion of 'buy.' The closing price of Solus Advanced Materials on the previous trading day was 10,300 won.
Shinhan Investment Corporation estimated that Solus Advanced Materials would record 160.3 billion won in sales for the fourth quarter of last year, a 19% increase compared to the previous quarter, along with an operating loss of 6.9 billion won. This figure exceeds market expectations.
In terms of copper foil revenue, it is expected to be a quarterly record at 80.6 billion won, a 47% increase compared to the previous quarter. Lee Jin-myoung, a senior researcher at Shinhan Investment Corporation, noted, "The increase in shipments to European and North American customers and operation of the second plant in Hungary have influenced this. Although profitability is expected to remain poor due to oversupply of copper foil and increased fixed costs from new plant operation, the deficit will be reduced."
Copper foil revenue is expected to record 51.5 billion won, reflecting a 5% increase compared to the previous quarter, indicating a steady external growth. This researcher explained that sales of high-end products are increasing and profitability is expected to improve. "By transitioning to standard product lines, we anticipate expanding growth momentum in the high-end market, including artificial intelligence (AI) accelerators where demand is expected to grow significantly," he said.
Shinhan Investment Corporation emphasized that despite the downward adjustment of expectations among secondary battery companies due to weak electric vehicle demand and policy risks, Solus Advanced Materials continues to achieve differentiated external growth compared to competitors through proactive local investment and diversification of customers. Profitability of copper foil remains poor due to delays in the recovery of the industry and high fixed costs, but the likelihood of a turnaround is expected to increase as we approach the second half of this year.
This researcher said, "The slow improvement in profitability continues to pose a valuation burden, yet the downside rigidity of stock prices remains solid due to the momentum of new growth in the copper foil sector and strong electronic materials results."