[Click eStock] "EcoPro BM, Earnings Improvement Outpaces Stock Price"

[Asia Economy Reporter Ji Yeon-jin] Meritz Securities announced on the 15th that it has raised its operating profit estimates for Ecopro BM for this year and next year, raising the target stock price to 385,000 KRW.

Researcher Joo Min-woo of Meritz Securities said, "Although the stock price has recently risen sharply, the pace of earnings improvement is progressing even more rapidly, so the valuation burden is low," adding, "The current stock price is at a price-to-earnings ratio (PER) of 19 times based on 2023 EPS (earnings per share) and 13 times based on 2024, making it the most undervalued domestic cathode material company based on next year's figures."

Ecopro BM is expected to post an operating profit of 26.4 billion KRW in the second quarter of this year, exceeding the forecast (21.6 billion KRW) by 22%. The margin in the third quarter of this year is expected to reach 9.2%, the highest margin since Ecopro BM's listing, achieving an operating profit of 36.1 billion KRW. This surpasses the forecast by 39%. The completion of the CAM5 cathode material integrated production system (gas, lithium, precursor, recycling) is reflected in these numbers. All newly expanded factories will apply this integrated production system. It is evaluated as a cost competitiveness incomparable to other cathode material companies.

This year's sales are expected to reach 2.46 trillion KRW, exceeding the forecast of 2.03 trillion KRW by 21%, and operating profit is expected to surpass the forecast (151 billion KRW) by 38%, reaching 218.9 billion KRW. Next year's sales are expected to exceed 4 trillion KRW, and operating profit is expected to surpass the consensus (225 billion KRW) by 59%, reaching 358.5 billion KRW.

Researcher Joo explained, "The reason for the explosive earnings growth is the accelerated expansion speed of SK Innovation and Samsung SDI," adding, "Ecopro BM's cathode material production capacity was 60,000 tons at the end of 2021, 90,000 tons at the end of 2022, 150,000 tons at the end of 2023, and 230,000 tons at the end of 2024 (reflecting European investment). Except for the 2024 capacity, the estimates until 2023 remain the same. The shipment forecast from this capacity was revised upward (2023: 99,000 tons → 135,000 tons), and profitability forecast (8.2% → 8.9%) was also revised upward as a result."

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