[Click eStock] "EcoPro BM, Expecting Increased Volume Effect in Q2"

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 88,000 KRW for Ecopro BM on the 23rd, expecting an increase in sales in the second quarter.

Ecopro BM recorded an operating profit of 8.8 billion KRW in the first quarter, a 39% decrease compared to the same period last year, but it is judged to have delivered results in line with market expectations.

Sales of cathode materials for electric vehicles (EV) reached 47 billion KRW, a 12% increase from the previous quarter. This was due to the partial operation effect of the production line for SK Innovation. The effect of the new plant operation is expected to be greater in the second quarter. The estimated sales for the second quarter are 65.1 billion KRW, expected to increase by 38% quarter-on-quarter and 171% year-on-year.

Sales of cathode materials for small batteries (Non-IT) amounted to 110.8 billion KRW. This was due to inventory accumulation demand from customers. Jeonghwan Kim, a researcher at Korea Investment & Securities, said, “The estimated sales for the second quarter are 106.7 billion KRW, slightly decreasing compared to the first quarter,” adding, “The impact of the novel coronavirus disease (COVID-19) is not as significant as feared, but the meaningful increase in the second half of the year expected at the beginning of the year will be difficult.”

Sales of cathode materials for energy storage systems (ESS) reached 7 billion KRW. This was because Samsung SDI significantly increased the usage proportion of Ecopro BM’s cathode material products. The cost of goods sold ratio was not high as only part of CAM 5 was operated at the end of the first quarter. Selling and administrative expenses increased by 19% year-on-year due to increased research and development-related costs.

Ecopro BM’s full-scale sales increase is expected to start from the second quarter. This is because the effect of the cathode material supply contract signed with SK Innovation last February is appearing faster than expected. Researcher Jeonghwan Kim said, “We maintain our top preference among secondary battery material companies,” explaining, “The growth rate will accelerate further as EV cathode material sales to Samsung SDI begin in the third quarter.”

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