[Click eStock] "L&F, Continuous Earnings Improvement"

Increase in High-Margin NCMA Product Share... Operating Profit Margin Up

[Asia Economy Reporter Minwoo Lee] L&F, which has already achieved strong performance in the third quarter of this year, is expected to continue its steep growth trend going forward. This is attributed to the increased operating rate of the new factory, which has led to a higher proportion of high-margin products.

On the 17th, KB Securities maintained its 'Buy' rating on L&F and raised the target price by 15%, from 260,000 KRW to 300,000 KRW. The closing price on the previous day was 231,500 KRW.

On the 12th, L&F reported consolidated sales of 240.7 billion KRW and operating profit of 13.5 billion KRW for the third quarter of this year. Sales increased by 185.7% compared to the same period last year, and operating losses turned into profits. Changmin Lee, a researcher at KB Securities, stated, "Due to the increased operating rate of the Guji new factory, the proportion of Tesla-bound high-nickel NCMA (Nickel-Cobalt-Manganese-Aluminum) cathode materials has rapidly increased to about 50%, exceeding market expectations. Profitability is improving sharply due to the mix improvement from the increased proportion of high-margin products."

Operating profit margins are expected to rise in both the short and medium to long term. By the end of next year, the proportion of NCMA cathode materials is estimated to exceed 70%. Accordingly, KB Securities forecasts that L&F will record sales of 2.1268 trillion KRW and operating profit of 142.7 billion KRW next year, representing increases of 112% and 264%, respectively, compared to this year's estimates.

Lee explained, "As domestic major customers expand their production capacity, demand for cathode materials for electric vehicles (EVs) is rapidly increasing. Additionally, from the second quarter of next year, the Guji new factory P3 will begin operations, further expanding production capacity. The increase in the proportion of high-margin NCMA products is clearly improving the product mix and reducing manufacturing costs. Despite the rise in raw material metal prices, price pass-through is proceeding smoothly."

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