[Click e-Stock] "Cheonbo, 1Q Operating Profit Estimate Exceeds Expectations... Strong Sales Volume"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained a buy rating and a target price of 460,000 KRW for Cheonbo on the 29th, estimating that the company's sales and operating profit for the first quarter of this year will exceed consensus estimates.

Cheonbo's sales for the first quarter of this year are analyzed to be 93.2 billion KRW, a 90% increase compared to the previous year, and operating profit is expected to be 19.8 billion KRW, up 109%, exceeding estimates by 8% and 19%, respectively. Jeonghwan Kim, a researcher at Korea Investment & Securities, explained, "This is because shipments to major customers, Chinese electrolyte companies, were solid. In China, both electric vehicle sales and secondary battery installation volume were strong without production disruptions in January and February this year." He added, "However, the price of LiPO2F2 (P electrolyte) lithium salt slightly declined this month due to the easing of raw material supply such as LiPF6 (lithium hexafluorophosphate), which lowered costs. Despite the price drop, strong sales volume and high operating rates are estimated to have kept the operating profit margin of secondary battery materials above 20%, continuing from the previous quarter."

In the second quarter of this year, raw material prices are expected to stabilize downward, leading to a decline in lithium salt prices. LiPF6, a major raw material, has strong demand, but product prices are normalizing as increased supply from new production lines in China is secured through long-term supply contracts. With the continued increase in China's secondary battery production, demand for LiPO2F2 is also rising, and second-quarter sales and operating profit are projected to reach 97.8 billion KRW and 19.4 billion KRW, up 62% and 102% year-on-year, respectively.

Researcher Kim stated, "Secondary battery and electric vehicle companies are increasing adoption of Cheonbo's products. Although LiPO2F2 is used in small quantities, it is gaining attention as a key additive that enhances stability in high-nickel batteries," adding, "Although Chinese competitors are expanding new facilities, mass production this year is difficult, so Cheonbo's oligopoly is maintained."

He also said, "The 300 billion KRW convertible bonds (CB) and bonds with warrants (BW) issued in February this year are for the expansion of 5,000 tons of LiFSI (F electrolyte)," and added, "With the price of the substitute LiPF6 rising, the importance of LiFSI product performance is increasing, so its adoption rate will further rise."

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