Hanwha Investment & Securities said on the 22nd that Solus Advanced Materials continues to face a difficult business environment due to the weakness of major clients.
At the same time, it lowered the target price to 9,000 won from 11,000 won and maintained a "buy" rating. The previous trading day's closing price of Solus Advanced Materials was 7,450 won.
Hanwha Investment & Securities expected Solus Advanced Materials to post revenue of 157.4 billion won and an operating loss of 19.2 billion won in the fourth quarter of last year. In the battery foil division, sales volume fell 2% from the previous quarter, likely hitting the lowest level of the year. By contrast, the copper foil division saw a clear pickup in second-half revenue as sales for artificial intelligence (AI) accelerators increased.
Researcher Lee Yong-wook of Hanwha Investment & Securities said, "Demand in Europe and the United States for client LG Energy Solution, which accounts for more than 80% of battery foil revenue, will be limited in its recovery through the first half."
However, starting in the second quarter of this year, volumes to CATL are expected to begin increasing, and by year-end CATL's share is projected to expand to a top-three level. The researcher explained, "Solus Advanced Materials is diversifying its customers to companies in Europe, Japan, and China, and the number of clients, which was four last year, could increase to eight by the end of this year," adding, "Through this, robust volume growth and a turnaround to profit in the battery foil segment are expected in 2027."
Hanwha Investment & Securities also noted that the copper foil division selloff pursued in July fell through due to difficulties meeting European government approval conditions, but a resale via a new buyer is expected to materialize within the first quarter of this year. The researcher said, "Accordingly, when valuing the company, we reflected an estimated 150 billion won attributable to controlling shareholders from the sale."
He added, "A short-term decline in shipments is a burden, but among the three domestic copper foil companies, it ensures a mid- to long-term competitive edge through the fastest client expansion, and it is expected to show steep elasticity when the industry recovers."