[Click eStock] "Daebo Magnetic, Equipment and Material Sales Growth Expected"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities forecasted on the 13th that Daebo Magnetic is expected to see an increase in sales in both equipment and materials sectors.

Daebo Magnetic is a company that produces and sells electromagnetic de-ironing equipment for secondary battery processes. It mainly manufactures de-ironing equipment that removes iron or non-ferrous metals contained in raw materials based on magnetic separation technology that removes iron using magnetic fields, and supplies these to secondary battery material companies and cell manufacturers.

Since the first quarter, Daebo Magnetic has seen simultaneous increases in order backlog and sales due to the resumption of expansion by secondary battery material and cell companies. Over 80% of the equipment supply contracts disclosed are for material companies in China and Korea, with a significant increase in orders for de-ironing equipment used in cathode and anode material production processes.

Researcher Kim Jeonghwan of Korea Investment & Securities said, "As demand for secondary battery materials rapidly increases, supply has become insufficient, leading to the announcement of multiple expansion plans this year," adding, "The investment pace of material companies and the increase in equipment orders will accelerate through 2023." Sales in the third quarter reached 11 billion KRW, setting a record for the highest quarterly sales, and the annual sales for this year are expected to exceed 35 billion KRW, more than doubling compared to the previous year, anticipating a significant profit rebound.

The increase in investments by material companies is expected to lead to orders for material processing contracts. The material processing business is projected to see growth in orders and sales starting with a contract worth 6.1 billion KRW signed on August 17, 2022, covering the next five years from January 2022. It is estimated that over 10 billion KRW has already been invested in material processing facilities, with potential annual sales expected to exceed 20 billion KRW.

Researcher Kim said, "The global supply shortage of secondary battery materials, which began to attract attention this year, the need for localization of raw materials heavily dependent on China and others, and the increased use of lithium hydroxide for high-nickel secondary battery production are expected to lead to additional material supply contract orders," explaining, "The orders are expected for materials requiring grinding and de-ironing processes, including lithium hydroxide processing additives for cathode and anode materials, which contribute to improving secondary battery performance."

The total equipment order amount disclosed as of the fourth quarter is 14.5 billion KRW, and including the estimated cumulative orders from the first to third quarters, the annual order amount for this year is 55.9 billion KRW. This is more than three times the order amount from last year. Next year, performance exceeding this year's sales is expected due to increased equipment sales and additional material supply contracts.

Researcher Kim said, "Daebo Magnetic monopolizes the global de-ironing equipment market and is diversifying into the materials business as an equipment company, which can also earn a valuation premium," adding, "Despite the start of the materials business, the current stock price remains at the level of early this year, so a stock price increase is expected next year."

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