Hanwha Investment & Securities on the 24th said EcoPro BM's Hungary plant is likely to gain in value thanks to benefits from European policies. It kept its "Buy" rating and raised the target price to 230,000 won from 180,000 won. EcoPro BM's previous trading day closing price was 191,900 won.
Lee Yong-wook, an analyst at Hanwha Investment & Securities, said, "With the implementation of the European Union (EU)-United Kingdom Trade and Cooperation Agreement (TCA) and the Industrial Acceleration Act (IAA) in Europe, demand for 'de-China' cathode materials that reduce reliance on China will rise sharply," and noted, "Given the aim of the laws to foster local manufacturing, EcoPro BM, which has secured a production base in Hungary, stands to benefit the most."
It analyzed that demand for de-China cathode materials could expand to as much as 40,000 tons (t) in 2027, when the TCA applies, and up to 330,000 tons in 2030, when the IAA gains full momentum. Based on this local production capacity, it added that the likelihood has increased of expanding the customer base beyond existing clients such as Samsung SDI and SK On to include CATL, LG Energy Solution, and Europe's new battery makers.
The analyst said, "Despite aggressive capacity additions over the past two years, weak demand from key customers drove down utilization rates, leading to a difficult period," and added, "The Hungary plant and the domestic CAM8 plant completion will, in step with Europe's policy shift, transform into a distinctive growth momentum (upside potential)."
However, it added that EcoPro BM's upside assumes that the IAA's de-China restrictions remain strict, so detailed guidance changes should be watched closely. EcoPro BM's first-quarter results are forecast at 555.9 billion won in revenue and 10.5 billion won in operating profit.
The analyst said, "For Samsung SDI, shipments of nickel cobalt aluminum oxide (NCA) cathode materials are expected to recover in Europe ahead of key new model launches—Kia EV2 in the first half and Hyundai Motor Ioniq 3 in the second half."