Kyobo Securities said on the 6th that EcoPro BM is expected to benefit from the launch of operations at its Hungary plant and collaboration with China's CATL. It raised its target price to 250,000 won from 160,000 won and maintained a buy rating. EcoPro BM's closing price in the previous session was 192,600 won.
Kyobo Securities projected EcoPro BM's first-quarter revenue this year at 564.9 billion won and operating profit at 10.2 billion won. That exceeds the market consensus of 544.6 billion won in revenue and 5.6 billion won in operating profit.
Choi Bo-young, an analyst at Kyobo Securities, said, "A reversal of about 4 billion won in provision for valuation losses on inventories is the main driver of profit," adding, "Cathode material sales volume is expected to increase 10% from the previous quarter, and expanded sales of nickel-cobalt-aluminum (NCA) cathodes to Samsung SDI are positive."
The average selling price (ASP) is expected to improve by 1%–2% on currency effects and higher metal prices. Choi said, "Sales to Europe will rebound as front-end customers complete inventory adjustments, but shipments to North America remain sluggish as North American electric-vehicle sales, including Ford, decline with the end of the Inflation Reduction Act (IRA)."
Sales of nickel-cobalt-manganese (NCM) cathodes to SK On are expected to rebound somewhat on a base effect after a sharp drop in the previous quarter, but a meaningful recovery appears limited.
Kyobo Securities cited three medium- to long-term momentum drivers for EcoPro BM: ▲ the launch of operations at the Hungary plant in May ▲ collaboration with CATL to become visible in the second half of this year ▲ development of all-solid-state batteries.
Choi said, "This year marks the first year of a structural shift, with confirmation of the earnings bottom and localization in Europe," adding, "From a share-price perspective, volumes from North American customers have already been excluded, and additional downside risk is limited as new vehicle orders in Europe are secured and utilization rates rise."
Choi added, "The key to an earnings recovery is the start-up of the Hungary plant in Europe and the benefit from policies mandating in-region production," noting, "All-solid-state batteries are likely to be commercialized first in the business-to-business (B2B) segment of humanoid robots, where price sensitivity is low."