[Click eStock] "L&F Going with Tesla, Earnings Soar This Year"

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 29th that it has given a buy rating and a target price of 32 million KRW for L&F, stating that due to the rapid growth of electric vehicle manufacturer Tesla, the demand for NCMA (Nickel, Cobalt, Manganese, Aluminum), a core material for electric vehicle batteries, is surging, leading to a high profit growth rate.

Jeon Chang-hyun, a researcher at Daishin Securities, said, "The high profit growth rate is expected to alleviate the burden of high multiples," adding, "Having Tesla as the largest customer is the biggest investment point."

The company is expected to record sales of 492.2 billion KRW in the first quarter of this year, a 241% increase compared to the same period last year, and an operating profit of 36.6 billion KRW, turning profitable. Although the demand for 'NCM523', a type of cathode material for electric vehicle batteries from SK On (Volkswagen), is partially decreasing due to semiconductor supply issues, the demand for NCMA from LG Energy Solution, which accounts for more than 70% of sales, remains solid, and performance is expected to increase significantly.

Researcher Jeon explained, "Through LG Energy Solution, shipments of NCMA cathode materials are expanding for Tesla's premium Model 3 and Y," adding, "Despite semiconductor issues, Tesla's electric vehicle production outlook continues to be revised upward." This means that profitability can improve as the sales proportion of 'NCMA', which has a higher margin compared to 'NCM523', expands.

This year’s sales are expected to increase by 155% from last year to 2.5 trillion KRW, and operating profit is expected to increase by 294% to 174.1 billion KRW. The sales proportion of 'NCMA', the main growth driver, is expected to continuously expand from 45% in 2021 to 60% this year and 70% next year. As Tesla's electric vehicle production in Shanghai is expected to increase from the current 450,000 units to 1.2 million units, the demand for NCMA is expected to continue rising.

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