[Click eStock] "Daebo Magnetic, Beneficiary of Increased Investment in Secondary Battery Materials"

[Asia Economy Reporter Eunmo Koo] KB Securities forecasted that Daebo Magnetic will benefit from increased investment in secondary battery materials.

Junghwan Kim, a researcher at Korea Investment & Securities, stated in a report on the 11th, “As large-scale investments are expected from companies supplying cathode materials and lithium, essential materials for mass production of secondary batteries for electric vehicles, we anticipate a stock price increase next year driven by Daebo Magnetic’s supply of deironing equipment to material companies and its lithium processing business.” Potential clients include cathode material companies preparing for large-scale investments such as Umicore, EcoPro BM, POSCO Chemical, and HwaYu Cobalt. Lithium companies like Albemarle, Livent, and SQM are also potential clients, as these global mining companies expect increased demand for lithium carbonate and lithium hydroxide used in secondary batteries.

The preparation for the materials business is progressing smoothly. Researcher Kim noted, “The investment in the materials processing business (a total of 8.8 billion KRW for the factory and production line), announced last August, is proceeding as planned,” adding, “The new production line will begin trial operation in the first half of next year and will be fully operational in the second half.” Next year’s materials sales are expected to be around 10 billion KRW, in line with previous forecasts. Initially, the materials business will focus on lithium hydroxide processing and plans to expand to cathode additive materials and other material processing in the future.

With equipment deliveries resuming, profits are also expected to rebound. Kim explained, “Equipment sales in the third quarter were 3 billion KRW, significantly down from the quarterly average of 5.6 billion KRW since listing, but this is presumed to be due to delayed recognition of equipment sales caused by COVID-19.” He added, “The order backlog at the end of the third quarter increased to 14.3 billion KRW, and new orders are estimated at 6.5 billion KRW, marking a quarterly record high.” This year, as cathode material and secondary battery companies announced expansion plans, orders for deironing equipment have started to increase.

As the value of the materials business is reflected, the stock price is expected to show strength. Kim said, “Although this year’s sales will be below 20 billion KRW, down from the previous year, next year sales from deironing equipment will increase and new sales from materials will emerge.” He added, “There were market concerns about the lithium processing business due to lithium oversupply (and falling lithium prices), but demand for lithium processing will grow with the increase in secondary battery production.” He further noted, “Lithium prices are also soaring in the fourth quarter,” and concluded, “We expect a stock price rise reflecting the value of the materials business.”

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