Hanwha Investment & Securities on the 26th said SungEel HiTech is continuing to improve profitability as metal prices rise. It raised its target price to 47,000 won from 34,000 won and maintained a "buy" rating. SungEel HiTech's previous session closing price was 38,650 won.
In the third quarter this year, SungEel HiTech posted revenue of 43.8 billion won and an operating loss of 12.3 billion won. Due to a high base effect from push-out shipments in the second quarter, sales volume and revenue fell in the third quarter.
Hanwha Investment & Securities projected that SungEel HiTech will post fourth-quarter revenue of 50.8 billion won and an operating loss of 9.2 billion won this year. It is estimated that sales volume will be similar to the second quarter due to customers' year-end inventory adjustments and limited input volume of materials and supplies. However, profitability is expected to improve as metal prices and the won-dollar exchange rate rise against the U.S. dollar.
Metal prices have been strong since on Oct.. This month, cobalt rose to $48 per kilogram and lithium to $13. Lee Yong-wook, a researcher at Hanwha Investment & Securities, said, "Since Congo, the world's largest cobalt producer, released an export ban in Feb. this year and implemented export quotas in Oct., prices have surged twice, and the export quotas are expected to continue through 2027."
Lithium remains oversupplied, but expectations are high for an improvement in supply-demand on the back of strong demand centered on electric vehicles and energy storage systems (ESS) in Europe and China.
The researcher said, "The recycling business has struggled due to weak metal prices, difficulties in sourcing materials and supplies, and reduced policy support, but conditions are improving," adding, "While metal prices remain below 2021–2022 levels and the worsened financial structure is a burden, if sourcing of materials and supplies becomes smoother starting next year, utilization rates and earnings will improve quickly."