[Click eStock] "SKC, Battery Copper Foil Performance Improvement for the Second Half Begins in Earnest"

[Asia Economy Reporter Oh Ju-yeon] KB Securities stated that SKC's second-quarter earnings this year met market consensus, and they expect the performance of battery copper foil to improve significantly starting in the second half of the year. Accordingly, they maintained a 'Buy' rating and raised the target price by 45.0% to 107,000 KRW.

According to the Financial Supervisory Service's electronic disclosure system on the 10th, SKC's second-quarter sales and operating profit this year were 656.2 billion KRW and 49.9 billion KRW, respectively, increasing by 2.7% and 3.5% compared to the same period last year.

KB Securities evaluated that the operating profit of the industrial materials segment was 13.8 billion KRW, increasing compared to both the previous quarter and the same period last year, and the semiconductor materials operating profit also improved significantly to 3.9 billion KRW compared to the previous quarter. The copper foil business (SK Nexilis) showed improvements in both revenue and operating profit, recording 76.3 billion KRW and 13.1 billion KRW respectively, compared to the previous quarter.

From the second half of the year, the strong performance of battery copper foil is expected to become more prominent. Recently released data showed that electric vehicle sales in Germany in July surged by 289.0% year-on-year and 93.1% month-on-month. European electric vehicle sales lead to increased battery shipments by Korean battery companies. Since this directly translates into increased demand for battery copper foil, it is analyzed that SKC's copper foil business segment will also gain momentum.

Baek Young-chan, a researcher at KB Securities, analyzed, "Over the next five years, the demand for battery copper foil is expected to grow at an average annual rate of 25.5%, which is faster than the expansion speed of battery copper foil production capacity. The tight supply and demand situation is expected to continue for a considerable period."

Regarding the reason for raising the target price, Researcher Baek explained, "Reflecting the global secondary battery demand increase, we raised SK Nexilis's operating profit forecasts for 2021 and 2022 by 5.3% and 3.7%, respectively, and due to the multiple increases of competing companies, the value of the copper foil business has significantly increased."

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