SKC Shines with Electric Vehicle Optimism and KCFT Acquisition Benefits

[Asia Economy Reporter Oh Ju-yeon] SKC posted results last year that fell short of market expectations due to sluggish chemical industry conditions, but this year, structural growth is expected as electric vehicle optimism and the effects of acquiring KCFT combine.

According to the Korea Exchange on the 6th, SKC closed at 58,900 KRW on the 5th. Classified as an electric vehicle and secondary battery-related stock, SKC's stock price has been on the rise since October last year. Compared to the closing price of 39,900 KRW on October 1 last year, it has increased by 47.62%. During the previous trading day, it even rose to 60,500 KRW, setting a new 52-week high.

This stock price increase is due to heightened expectations for improved performance following the acquisition of KCFT (formerly LS Mtron's copper foil and thin film business division), the industry leader in manufacturing 'copper foil,' a core material for electric vehicle batteries. Copper foil is a thin film made by processing copper with advanced technology and is used in the anode material of secondary batteries. SKC, which announced the acquisition of KCFT in June last year, completed the final acquisition procedures last month and will officially start the copper foil business from the first quarter of this year.

KCFT's sales last year were 323.4 billion KRW, and operating profit was 62.8 billion KRW, representing increases of 28% and 67% respectively compared to the previous year, with an operating profit margin of 19.4%. This confirms the high profitability of the copper foil business within secondary battery materials. Operating profit is expected to increase by 35% to 84.7 billion KRW this year. Accordingly, the securities industry anticipates that this year will mark the first year of structural growth for SKC through the acquisition of KCFT.

Hwang Yoo-sik, a researcher at NH Investment & Securities, predicted, "The first quarter of this year will be a period when the company's structure innovatively shifts from chemical business to copper foil business." He added that although initial operating costs for KCFT's fourth copper foil plant will occur in the first quarter, as mass production shipments increase, quarterly operating profit will gradually rise.

SKC's target stock price has also been significantly revised upward. Yuanta Securities raised it from 48,000 KRW to 64,000 KRW, and Hi Investment & Securities increased it from 53,000 KRW to 68,000 KRW. Yoon Jae-sung, a researcher at Hana Financial Investment, said, "Among domestic electric vehicle battery material companies, SKC holds a high global market share (15%), and considering the expected capacity expansion of 50,000 to 60,000 tons including overseas factories by 2022, the medium- to long-term growth prospects are very bright," raising the target price from 60,000 KRW to 70,000 KRW. Researcher Yoon emphasized, "However, since the stock price has roughly doubled after the KCFT acquisition news and uncertainty has increased in existing businesses due to COVID-19 (Wuhan pneumonia), a short-term pause is possible, but this is a buying opportunity."

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