DB Securities said on the 12th that ECOPRO BM faces a valuation burden and needs an order from CATL for its Hungary plant for the stock to rise. It maintained a "neutral (HOLD)" rating and a target price of 130,000 won.
DB Securities estimated that ECOPRO BM posted, on a consolidation basis, sales of 585 billion won and operating profit of 24.8 billion won in the fourth quarter of last year (October–December). Sales rose 25% from a year earlier, and operating profit is expected to swing to a profit.
Ahn Hee-su, an analyst at DB Securities, said, "By extending the depreciation useful life, about 40 billion won in previously booked depreciation expenses were reversed and reflected in results," and added, "In addition, valuation gains from rising lithium prices had a slight impact."
Ahn said, "The cathode materials business fell 15%, mainly due to shipments to SK On, because of the end of U.S. consumer subsidies and Ford's adjustment of its EV strategy," adding, "As of the fourth quarter of last year, the sales mix of ECOPRO BM and EcoPro EM is estimated at 25 to 75, respectively. The core business is still in a loss zone."
This year is expected to be a "barley hump" for the cathode materials industry. Operating profit this year is expected to be 1.4 billion won, down 98% from a year earlier. While selling prices will rise slightly on higher metal prices, shipments are projected to fall 8% year over year to 70,000 tons.
Ahn said, "BM will defend volume with the Hungary plant's operation despite lower shipments to SK On, but EM will see shipments decline as EV-bound volume is transferred to Hungary from the second half, even with increased shipments to Samsung SDI's energy storage systems (ESS)," adding, "The 70,000-ton shipment is similar to 2024 volume, but excluding the reversal of valuation gains at that time, most was in the red. What has changed is firm metal prices and lower depreciation expenses."
Ahn added, "The current share price carries some valuation burden," and said, "For additional upside, an order from CATL for the Hungary plant is needed."