[Click eStock] "L&F Continues High Growth Due to Increased Demand from Tesla"

[Asia Economy Reporter Kwon Jaehee] Hyundai Motor Securities maintained a 'Buy' rating and a target price of 330,000 KRW for L&F on the 25th. This is due to L&F's major client being Tesla, with high growth expected following the expansion of Tesla's Shanghai factory.

The early operation of L&F's Guji 2 plant in the second quarter of this year has significantly raised earnings forecasts. L&F recently announced through a public disclosure the additional expansion of 90,000 tons of cathode materials at the Guji 3 plant. With this expansion and the local plant expansion through a joint venture (JV) in the U.S., capacity is expected to grow fivefold from 60 KTPA in 2021 to 300 KTPA in 2026.

Additionally, most of L&F's demand comes from Tesla's China-bound shipments. As Tesla's Shanghai factory expands to a scale capable of producing 88,000 units per month starting in August, demand for cathode materials is also expected to surge sharply.

An important point is whether the future U.S. plant expansion will meet the requirements of the Inflation Reduction Act (IRA). Since L&F plans to enter the U.S. market through a JV with a recycling company, it is judged that there will be no major issues in sourcing over 40% in 2023. The IRA stipulates that key minerals must be extracted or processed in the U.S. or countries that have a Free Trade Agreement (FTA) with the U.S., but the scope of this is unclear. However, since the processing location is more important than the mining location, it is expected that adequate measures can be taken.

Researcher Kang Dongjin of Hyundai Motor Securities analyzed, "With the surge in demand from Tesla, expansion into the U.S. and Europe, and securing OEM customers, long-term growth is possible."

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