[Click eStock] "L&F, Anode Material Sales More Than Double"... Target Price Up

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 14th that it has raised the target stock price for L&F from 240,000 KRW to 270,000 KRW, forecasting a sharp performance improvement as the Guji 2nd plant starts new operations this year, doubling the sales volume of cathode materials compared to last year.

Researcher Lee Jong-hyung of Kiwoom Securities stated, "L&F signed a cathode material supply contract with Tesla last year and established a strategic partnership with Redwood Materials, a U.S. battery recycling company, securing a solid demand base as the number one electric vehicle manufacturer and a foothold for North American market entry," adding, "We maintain a buy rating from the perspective of long-term growth through outstanding NCMA cathode material technology and capacity expansion."

In the fourth quarter of last year, L&F's sales reached 380.1 billion KRW, a 277% increase year-on-year, and operating profit turned positive at 28.3 billion KRW. This marked the highest record for two consecutive quarters. Although sales growth was slower than expected, profitability improved faster than anticipated due to the increased proportion of NCMA supplied from LG Energy Solution to Tesla, with operating profit exceeding the market forecast of 26.9 billion KRW. Excluding a special year-end bonus of 3.5 billion KRW, the actual operating margin for the fourth quarter reached 8.4%, significantly surpassing market expectations (OPM 6.4%).

Researcher Lee explained, "Due to the sharp stock price rise in the second half of last year, derivative financial liabilities related to convertible bonds, warrants, and redeemable convertible preferred shares reflected an evaluation loss of 137.6 billion KRW, resulting in a pre-tax and net loss," but added, "Since this is a book evaluation loss without cash outflow, its impact on the stock price is limited."

With the new operation of the Guji 2nd plant (70,000 tons) in the second quarter this year, the annual cathode material production capacity will expand significantly from about 50,000 tons last year to 120,000 tons by the end of 2022. Along with the new plant operation, cathode material sales volume this year is expected to more than double compared to last year (about 40,000 tons), and the proportion of high-margin NCMA cathode materials will increase from less than 50% last year to around 70% this year, leading to simultaneous expansion in scale and profitability improvement.

Considering this, this year's performance is expected to show rapid growth with sales of 2.26 trillion KRW (a 133% increase year-on-year) and operating profit of 150.2 billion KRW (239%).

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