[Click eStock] "EcoPro BM, Disappointing 4Q... Bright Outlook for This Year"

Clients and Product Lines Still Superior... Additional Growth Possible Through Increased Production Capacity

[Asia Economy Reporter Minwoo Lee] EcoPro BM's operating profit for the fourth quarter of last year is expected to fall short of market expectations by about 10%. This year, it is anticipated that additional growth will be possible as the company continues to supply core components to existing clients Samsung SDI and SK Innovation, while its parent company links LG Chem with its European business.

On the 11th, Shinhan Financial Investment forecasted that EcoPro BM would achieve sales of 255.4 billion KRW and an operating profit of 17.5 billion KRW in the fourth quarter of last year, representing increases of 73.4% and 970.0% respectively compared to the same period the previous year. Nevertheless, the operating profit forecast of 19.5 billion KRW was about 10.6% below market expectations. Senior researcher Yongjin Jeong of Shinhan Financial Investment explained, "Inventory adjustments in the deferred Non-IT sector were reflected in the fourth quarter, and export recognition was partially delayed due to disruptions in maritime transport," adding, "The sudden strengthening of the Korean won also reduced the apparent export performance." He further noted, "However, since these negative factors are mostly one-time issues, and the export decline caused by transport disruptions may stimulate investment in overseas production sites, it is necessary to monitor the situation."

Recently, while the stock prices of secondary battery material companies have relied on new expansion issues, EcoPro BM, which has already established joint ventures with its largest clients, has been relatively overlooked. Researcher Jeong stated, "Nonetheless, EcoPro BM continues to supply core materials to existing clients such as Samsung SDI and SK Innovation, and considering that its parent company EcoPro has linked LG Chem with its European business, it holds a balanced reference base with major domestic companies," adding, "The company is responding by developing all product lines including high-nickel NCM, NCA, and NCMA, making it the company with the most diversified customers and products, thus having ample room for additional growth."

Against this backdrop, Shinhan Financial Investment raised EcoPro BM's target stock price by 21.1% to 230,000 KRW and maintained a 'Buy' investment rating. The closing price on the previous trading day was 194,000 KRW. Researcher Jeong explained, "Production capacity, which was about 60,000 tons at the end of 2020, is planned to increase to 180,000 tons by 2024," adding, "Based on a superior customer and product portfolio, an average annual production capacity expansion of 33.9% is achievable."

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