IBK Securities said on the 19th that as demand for electric vehicles (EVs) for COSMO AM&T has slowed, weak earnings are expected to continue through next year. It lowered its investment opinion from "buy" to "trading buy (short-term buy)." However, it raised the target price from 43,000 won to 50,000 won.
Researcher Lee Hyeon-uk at IBK Securities said, "The secondary battery industry peaked in 2023 and has steadily worsened, and the unfavorable conditions are expected to continue next year," adding, "We expect the timing of a full-fledged earnings recovery to be in the first half of 2027."
Earlier, COSMO AM&T posted third-quarter sales of 105.3 billion won and operating profit of 130 million won this year. Those figures were down 12.4% and 74.5%, respectively, from the previous quarter, and fell well short of market expectations (sales 114.0 billion won, operating profit 600 million won).
Lee said, "Due to the lower utilization rate in the cathode materials business segment, the cathode materials segment continued to post losses, and profitability was at the break-even point (BEP)," adding, "Cathode shipments to Samsung SDI, which had been suspended since the third quarter of last year, resumed in the first quarter of this year and shipment volume has been gradually increasing, but shipments of single-crystal cathode materials to LG CHEM have gradually decreased due to weaker downstream demand."
The outlook for fourth-quarter earnings is also bleak. Lee added, "Demand tied to power tools and IT is solid, but EV-linked demand is weak, so a conservative approach to fourth-quarter results is needed," and "Shipments of energy storage systems (ESS) to Samsung SDI are expected to be possible after next year due to delays in spec changes."
On top of that, plans to expand cathode production capacity (CAPA) are also being delayed. According to Lee, cathode CAPA was scheduled to increase from 30,000 tons last year to 100,000 tons this year, but amid concerns about slowing EV market demand, the start of operations is expected to be pushed back to the second half of next year.