Daol Investment & Securities said on the 1st that L&F is expected to benefit as electric vehicle sales increase, mainly in the European market. It maintained a "Buy (BUY)" recommendation and raised the target price to 180,000 won from 130,000 won. L&F's closing price in the previous trading day was 143,900 won.
Researcher Yu Ji-ung at Daol Investment & Securities said, "A recovery in the electric vehicle (EV) market has been appearing since the start of the year," and noted, "New revenue in the energy storage system (ESS) institutional sector is also expected to begin joining from the third quarter of this year."
Yu judged that L&F will benefit from a rebound in EV sales. Under the "Industrial Acceleration Act (IAA)" that the European Union (EU) released last month, conditions are being put in place for EV sales in the European market to rebound from the second quarter of this year.
Yu said, "We expect L&F to have the greatest potential upside amid this year's structural changes at global EV makers," and explained, "Starting in the first quarter of this year in the European market, shipments will begin of L&F's 46-pi high-nickel (High-Ni) cathode materials tied to the launch of long-body models."
Supply of lithium iron phosphate (LFP) cathode materials was also cited as a driver of earnings improvement.
Yu explained, "LFP supply will begin shipments around the third quarter of this year," adding, "The recently disclosed supply volume to Samsung SDI totals about 1.6 trillion won and will be supplied over three years."
He added, "Assuming an EBITA margin of 12%, we estimate the business value at about 3 trillion won."