[Click eStock] "Cheonbo, 3Q Earnings Growth... Buy Strategy if Stock Price Drops"

[Asia Economy Reporter Ji Yeon-jin] Hana Securities maintained a buy rating and a target price of 380,000 KRW for Cheonbo, stating that although there is a possibility of a stock price decline due to downward revisions in this year's earnings estimates, steep earnings growth is expected with the start-up of new facilities in the first half of next year.

On the day, Hana Securities lowered Cheonbo's sales forecast for this year by 13%, from 370.6 billion KRW to 322.2 billion KRW.

Cheonbo recorded sales of 65.8 billion KRW in the second quarter, a 9% increase year-on-year, and operating profit of 12 billion KRW, a 25% increase, but these figures fell short of market expectations. The secondary battery materials segment (accounting for 56% of sales) showed weakness with sales down 44% quarter-on-quarter to 36.8 billion KRW and operating profit down 41% to 7.2 billion KRW. This was due to the suspension of electric vehicle production lines caused by China's lockdown measures, which significantly reduced demand for lithium salts and additives, as well as a decline in the price of the raw material 'LiPF6' for the main product P electrolyte (which accounts for 58% of the segment's sales).

The semiconductor and display materials segment (accounting for 31% of sales) saw sales increase 23% year-on-year due to high selling prices, but sales decreased 10% quarter-on-quarter due to weakening demand for end products. This marked the first quarterly decline since Q4 2020.

Sales in the third quarter of this year are expected to increase 22% quarter-on-quarter to 80.5 billion KRW, with operating profit rising 26% to 15.2 billion KRW during the same period. Researcher Kim Hyun-soo of Hana Securities said, "China's retail sales of electric vehicles in July reached 490,000 units, a 119% increase year-on-year, showing a clear upward trend," adding, "the price of LiPF6, which is linked to selling prices, rose 10% at the end of July compared to the end of June, showing signs of recovery, so earnings growth is possible in the third quarter."

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