KB Securities said on the 8th that L&F is expected to benefit from expanding demand for lithium iron phosphate (LFP) cathode materials for energy storage systems (ESS) and from an increase in Tesla's electric-vehicle deliveries. It maintained a Buy rating and raised its target price to 260,000 won from 180,000 won. L&F's closing price in the previous session was 185,000 won.
Lee Chang-min, an analyst at KB Securities, said, "Unlike competitors for whom a decline in shipments is unavoidable due to the end of the U.S. Inflation Reduction Act (IRA) benefits, relatively favorable industry conditions are continuing," and noted, "Tesla's electric-vehicle deliveries in the first quarter this year increased 6.5% from a year earlier, retaking the global No. 1 spot from BYD, and Tesla's main ternary models are equipped with L&F's N95 cathode material, for which L&F is the exclusive supplier."
The expectation of a large one-off gain is also a positive for operating profit. As of the end of March this year, both the price of lithium carbonate and the won-dollar exchange rate rose significantly compared with the end of December last year, leading to an estimate that, following the fourth quarter (77.9 billion won), hundreds of billions of won in reversals of inventory valuation losses will occur.
Accordingly, L&F's first-quarter sales this year are projected at 686 billion won and operating profit at 89.9 billion won. Sales are expected to increase 88% from a year earlier, and operating profit to swing to a profit.
The analyst said, "L&F is the biggest beneficiary of the surge in LFP demand for ESS," adding, "With the 1.6 trillion won order announced in March for Samsung SDI at the center, LFP is expected to be sold out for the next several years."
The analyst added, "L&F's N95 products are also expected to be installed in Tesla's Autonomous Driving and Humanoid Robot businesses," and said, "With high oil prices persisting and the appeal of electric vehicles coming to the fore, being part of Tesla's core value chain—the most prominent brand in terms of recognition—is a major attraction."