[Click e-Stock] "Cheonbo Expected to Benefit from Increased Demand for Electrolytes and Additives"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] On the 16th, Kiwoom Securities stated that demand for electrolytes and additives is expected to increase due to the expansion of the front-end market for Cheonbo.

Cheonbo recorded sales of 73.8 billion KRW and operating profit of 11.9 billion KRW in the third quarter, maintaining growth of 93% and 68% year-on-year, respectively. However, profitability in the secondary battery sector slightly declined compared to the previous quarter due to rising raw material costs, including general-purpose electrolyte (LiPF6), and fixed cost burdens from the operation of a new electrolyte (LiPO2F2) plant. The fourth quarter of this year is expected to see improved profit margins due to price increases with a 1-2 month lag effect and increased sales related to P electrolytes. Recently, as the rate of increase in some raw material prices has slowed, cost burdens are also expected to ease compared to the third quarter of this year.

Through a recent earnings announcement, the company added expansions for additives such as VC and FEC in addition to electrolyte-centered capacity increases. It is estimated that due to recent power shortages in China, the need for stable pricing and supply volume has increased, leading to changes in the existing expansion plans at the request of client companies. Researcher Dongwook Lee of Kiwoom Securities said, “The company plans to flexibly respond to market changes by securing stable demand through binding contracts while diversifying its product portfolio. Regarding electrolytes, the company intends to continue investing 20,000 tons annually through its subsidiary Cheonbo BLS as before.”

As demand for special electrolytes and additives is expected to expand, further performance improvements are anticipated. This is because the adoption rate of LFP batteries, centered in China, is increasing, which is expected to raise the usage of VC and FEC additives and F electrolytes.

Researcher Dongwook Lee said, “While NCM is expected to compensate performance through high-nickel content, in the case of LFP, the use of special electrolytes and additives is important to improve battery capacity and safety. If the expansion of additives is completed by 2025, the selling price can be reduced from the current 50,000 KRW per kilogram to 30,000 KRW, creating economies of scale,” he added with expectations.

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