[Click eStock] "EcoPro BM, Buy on Growth Report 2021~2023"

[Asia Economy Reporter Oh Joo-yeon] Daishin Securities on the 20th maintained a 'Buy' rating on EcoPro BM, expecting this year's operating profit to fall short of consensus but highlighting its mid- to long-term growth potential, and raised the target price by 15% from the previous to 69,000 KRW.

EcoPro BM's operating profit for Q4 2019 is expected to be 6.2 billion KRW, missing the consensus by 11.5 billion KRW. This is due to a slowdown in shipments of small battery NCA and one-off year-end expenses, resulting in a 36.6% decrease in operating profit compared to the previous quarter.

This year, operating profit is forecasted to fall short of consensus (74.4 billion KRW), reaching 56.3 billion KRW, as fixed cost burdens intensify from Q2 onward.

Researcher Lee Won-joo stated, "Depreciable plant assets as of Q3 amount to approximately 180 billion KRW, and non-depreciable assets under construction are about 140 billion KRW. Considering the company's new 30,000-ton cathode material production facility mass production schedule, depreciable plant assets will increase to about 400 billion KRW from Q2, causing depreciation expenses to rise from around 7 billion KRW per quarter to about 16 billion KRW starting Q2."

Lee added, "On the other hand, the new NCA annual 20,000-ton production facility is unlikely to achieve a high utilization rate easily," analyzing that "this is because shipments of automotive NCA batteries to client S are expected to increase slightly from Q3."

However, from 2021, cathode material shipments are expected to increase by 36% year-on-year due to new client acquisitions by S.

Lee said, "Reflecting the possibility that client S will secure additional customers for automotive batteries from 2021, we have raised performance estimates, increasing the 2021 operating profit forecast by 25.4%."

With equity capital of 357 billion KRW and a present value of future residual earnings of 1.047 trillion KRW, the target market capitalization is set at 1.4 trillion KRW, and the target stock price is proposed to rise from 60,000 KRW to 69,000 KRW.

Lee concluded, "EcoPro BM is a company with outstanding mid- to long-term growth potential, with an expected compound annual growth rate (CAGR) of 44% in earnings per share (EPS) from 2021 to 2023. I recommend patience and viewing any stock price decline as a buying opportunity."

This content was produced with the assistance of AI translation services.