'Secondary Batteries' Solidifying Their Dominance on KOSDAQ

Market Cap Weight Soars from 6% to 45% in One Year
Top 2 Companies by Market Cap Rise Side by Side

[Asia Economy Reporter Minji Lee] Amid active changes in market capitalization rankings in the KOSDAQ market, the proportion of secondary battery material stocks has grown from 6% to 45% over the past year.

According to the Korea Exchange on the 19th, as of the previous day, the market capitalization of LNDF, a secondary battery material (cathode material) company, was 8.9105 trillion KRW, surpassing Celltrion Healthcare (8.8724 trillion KRW), which was ranked second in market capitalization. It is 1.997 trillion KRW behind Ecopro BM (10.9073 trillion KRW), the top company in KOSDAQ market capitalization and a secondary battery cathode material producer. Following Ecopro BM reclaiming the top spot in market capitalization earlier last month, LNDF rose to second place, making both the first and second largest companies in KOSDAQ market capitalization secondary battery stocks. Cheonbo, a secondary battery material company producing electrolytes (2.799 trillion KRW), also ranked eighth.

Among the top market capitalization companies (ranked 1 to 10), the proportion of secondary battery material companies (Ecopro BM, LNDF, Cheonbo) amounts to approximately 45% (22.6169 trillion KRW). Just a year ago, the proportion of secondary battery stocks among the top market capitalization companies was negligible. Ecopro BM was the only secondary battery material stock. Its market capitalization share was only 6%, far behind bio-related companies centered on Celltrion Healthcare and Celltrion Pharm (58%), but now it has firmly established itself as a leading stock.

In particular, Ecopro BM and LNDF are advancing despite lowered expectations for major cell companies such as LG Energy Solution, Samsung SDI, and SK Innovation. This is due to forecasts that they will deliver solid performance despite the Federal Reserve's interest rate hike trend, which has damaged investor sentiment toward growth stocks that led the market after COVID-19, and the burden of rising raw material prices such as nickel and lithium caused by the Russia-Ukraine war. The annual operating profit forecast for Ecopro BM estimated by securities firms increased by about 14% compared to three months ago to 254.3 billion KRW, and LNDF's forecast was raised by 71% to 265.5 billion KRW.

Hyunwook Lee, a researcher at IBK Investment & Securities, explained, "In difficult markets, material companies that can generate stable cash flow will attract more market attention than cell and equipment companies," adding, "Due to rising raw material prices, material stocks with strong pricing power will continue to perform better than battery stocks with weaker pricing power."

On the other hand, the bio sector is expected to have less room to maneuver. Earnings forecasts are also being revised downward, making it difficult for Celltrion Healthcare to return to the second place in market capitalization. Celltrion Healthcare's annual operating profit forecast was lowered by 8% in two months to 258 billion KRW. Geunhee Seo, a researcher at Samsung Securities, diagnosed, "Although profitability is expected to improve in the second half due to the transition to a direct sales system, the stock price is sluggish due to concerns over intensified competition in the biosimilar market."

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