[Click eStock] Cheonbo, Price Attractiveness Rises Again... Steep EPS Growth

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 11th that it maintains a 'Buy' rating and a target price of 250,000 KRW for Cheonbo. The target price was calculated by applying a price-to-earnings ratio (PER) of 30 times to the 24-month forward earnings per share (EPS).

Although the multiple, which was around 70 times PER as of 2020, is inevitably expected to decline in the mid to long term, there is no need to worry about a sharp de-rating in the early stage of the front market development. Hyunsoo Kim, a researcher at Hana Financial Investment, said, "Considering an average EPS growth rate of 45% over the next three years, applying a PER of 30 times is reasonable," adding, "Given the recent trend of secondary battery material companies starting to reflect 2023 earnings in their stock prices, Cheonbo's stock price upside potential is expected to further expand."

Second quarter earnings are expected to continue growing with sales of 52.5 billion KRW (YoY +56%, QoQ +7%) and operating profit of 9.8 billion KRW (YoY +55%, QoQ +3%). In the secondary battery materials segment, sales growth due to increased volume from new operations is expected to accelerate from the second half of the year, while in the second quarter, sales growth is expected to be driven by rising costs. The LCD materials segment is also expected to see sales growth as panel prices continue to rise and panel makers maintain high operating rates.

For 2021, steep growth is projected with sales of 248.3 billion KRW (YoY +60%), operating profit of 49.5 billion KRW (YoY +64%), and net income attributable to controlling interests of 44.7 billion KRW (YoY +63%). The sales proportion of secondary battery materials is expected to rise from 39% in 2019, 45% in 2020, 67% in 2021, to 77% in 2022. Hana Financial Investment expects global battery shipments in 2023 to increase 2.5 times compared to 2020. Cheonbo's secondary battery material production capacity is forecasted to increase about fourfold by 2023 (1,840 tons in 2020, 4,000 tons in 2021, 8,000 tons in 2022, and 12,000 tons in 2023), leading to sales growth surpassing market growth rates and continued market share gains.

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