[Click eStock] "SKC Expected to Surpass 10,000 Tons of Copper Foil Production in 3Q This Year"

Increase in Asset Proportion of Mobility Materials Sector... Additional Growth Potential

[Asia Economy Reporter Minwoo Lee] SKC began operating its Jeongeup Plant 5 (copper foil plant) from the end of the second quarter, and copper foil production in the third quarter is expected to exceed 10,000 tons. By expanding production capacity early, it is analyzed that SKC can prevent a short-term decline in market share while also improving costs through economies of scale.

On the 3rd, Kiwoom Securities maintained its 'Buy' rating and target price of 214,000 KRW for SKC based on this background. The closing price the previous day was 144,500 KRW.

SKC's Jeongeup Plant 5 began commercial operation from the end of the second quarter, and its performance is expected to be reflected in the third quarter. As electric vehicles (EVs) increase globally, SKC's copper foil production is expected to exceed 10,000 tons in the third quarter this year due to the expansion effect. Dongwook Lee, a researcher at Kiwoom Securities, explained, "Based on extensive expansion experience and technology, SKC is negotiating with customers who have signed mid- to long-term contracts to shorten Process Change Notification (PCN) periods, and Plant 6 is also expected to start early. Through this, short-term market share decline can be prevented and profitability improved."

The strong price of propylene glycol (PG) is also positive. Due to increased demand for construction applications, the supply of PG has been limited amid expanded polyol margins for propylene oxide (PO) companies both domestically and internationally. Additionally, the resurgence of COVID-19 has increased demand for USP-grade PG in hygiene and pharmaceutical sectors. Furthermore, cost increases due to logistics restrictions have contributed to price rises. As a result, domestic PG exports last month recorded an all-time high. The researcher predicted, "SKC will continuously improve processes and fully operate the new DPG plant, increasing PG production capacity to a total of 210,000 tons."

Concerns about the holding company's group affiliate mergers and large-scale investments in copper foil expansion are considered limited. SKC has already stated that it is not considering a merger with the holding company, and considering the scale after the Malaysia plant operation, it is not seen as a major issue. The researcher diagnosed, "SKC's mobility materials division is expected to have the largest asset proportion among all business divisions. Considering the timing of value reflection for LG Chem and Hanwha Solutions' battery and solar divisions, additional multiple increases are expected starting from 2023."

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