[Click eStock] "L&F, Profitability Improvement Due to Strong Tesla Sales"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained a buy rating and a target price of 310,000 KRW for L&F on the 9th, stating that sales growth and profitability improvement are occurring simultaneously.

L&F, a secondary battery component manufacturer, recorded sales of 380.1 billion KRW in the fourth quarter of last year, and operating profit reached 28.3 billion KRW, exceeding the consensus estimate of 26.9 billion KRW. Kim Hyun-soo, a researcher at Hana Financial Investment, explained, "The cathode material segment for electric vehicle batteries drove performance growth with sales of 262.3 billion KRW, a 98% increase compared to the previous quarter," adding, "The operating profit margin continued to improve due to the fixed cost leverage effect from increased operating rates of new expansion lines, reaching 7.4%, up 1.8 percentage points from the previous quarter."

However, a derivative loss of 146.4 billion KRW occurred as a non-cash non-operating expense due to the difference between the conversion price and market price of convertible bonds and bonds with warrants, resulting in continued losses.

Hana Financial Investment expects L&F's first-quarter performance this year to continue its growth trend with sales of 489 billion KRW and operating profit of 36.9 billion KRW. It forecasts that profitability will improve with increased operating rates of new lines amid growing material demand driven by strong sales from its largest customer, Tesla, maintaining an operating profit margin at the 7% level. Annual cathode material shipments are projected to increase from 40,000 tons in 2021, 88,000 tons in 2022, 126,000 tons in 2023, to 180,000 tons in 2024. Additionally, since raw material price increases are passed on to product prices, the actual average selling price (ASP) is expected to remain largely unchanged.

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