[Click eStock] L&F, Unstoppable Growth Riding the Electric Vehicle Wave

[Asia Economy Reporter Kwon Jae-hee] Daishin Securities maintained a 'Buy' rating on L&F on the 28th, setting a target price of 340,000 KRW.

L&F's sales for the second quarter of this year are expected to reach 936.5 billion KRW, and operating profit is projected at 77.2 billion KRW, representing increases of 356% and 1243% year-on-year, respectively. Operating profit is expected to exceed market forecasts by 10%, marking strong performance. Amid a shortage of high-nickel cathode materials, demand for NCMA (Nickel Cobalt Manganese Aluminum) from LG Energy Solution appears to have driven the strong results. Currently, all production lines are running at full capacity, and inventory is being actively reduced. The sales proportion of NCMA in the second quarter is expected to expand to 65%, with prices rising 30% quarter-on-quarter due to continued increases in metal prices. Exchange rate appreciation is also expected to contribute to sales growth.

Not only in the second quarter but throughout the year, solid NCMA performance is expected to continue. L&F's sales for 2022 are projected at 3.8 trillion KRW, with operating profit at 304.9 billion KRW. Confirming steady NCMA cathode material demand from major customers, a steep growth trend is anticipated to continue, with record-high sales and profits expected each quarter. Additionally, in the second half of the year, concretization of the North American cathode material value chain cooperation with Redwood Materials and announcements of overseas capacity expansions from 2024 onwards are expected to act as stock price momentum.

Jeon Chang-hyun, a researcher at Daishin Securities, analyzed L&F, stating, "Strong growth of NCMA for major customers is expected," and added, "Compared to competitors, valuation pressure is alleviated, making it the top preferred stock in the sector."

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