L&F's Uptrend Pauses Due to US Factory Denial... Securities Firms Say "Short-Term Price Correction Is a Buying Opportunity"

[Asia Economy Reporter Myunghwan Lee] L&F recently paused its four-day consecutive rise. This came after the Ministry of Trade, Industry and Energy denied L&F's plan to build a factory in the United States. However, securities firms advised that there is no need for major concern as L&F's technology related to secondary battery materials is well supported.

According to the Korea Exchange on the 17th, on the 15th, L&F closed at 230,000 won, down 2.29% (5,400 won) from the previous trading day. This marked a decline after five consecutive trading days of gains. On the 16th, it fell another 0.65% (1,500 won) to close at 228,500 won. Previously, on the 14th, when the KOSPI fell 1.56% due to the U.S. Consumer Price Index (CPI) exceeding expectations, L&F closed up 0.43%.

L&F's weakness over the past two days appears to be influenced by the Ministry of Trade, Industry and Energy's refusal to approve L&F's construction of a cathode material factory in the U.S. On the 14th, the ministry held the 40th Industrial Technology Protection Committee meeting at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, and denied L&F's U.S. factory construction plan. The committee explained, "The technology in question is cutting-edge and forms the foundation of competitiveness in the battery industry. Its overseas leakage could negatively impact domestic industrial competitiveness and national security. Due to the lack of specific reasons for technology transfer and insufficient security measures to protect and prevent leakage, approval was denied."

Following the government's denial, L&F expressed its intention to request a reconsideration. In a disclosure on the 15th, L&F stated, "We humbly accept the government's decision to protect national core technology and plan to request a reconsideration by supplementing the points that were insufficient during the review. The review result will have no impact on future business prospects (new facility investment, overseas expansion, new product development, sales outlook)."

L&F was expected to be a major beneficiary of the Inflation Reduction Act (IRA), passed by the U.S. Congress last month, attracting strong investor expectations. The securities industry also identified L&F as the biggest beneficiary following the passage of the IRA last month.

However, since L&F's technology in the secondary battery materials sector is well supported, securities firms analyze that there is no need to be overly concerned about this denial. Noh Woo-ho, a researcher at Meritz Securities, said, "L&F plans to request reapproval, including a scenario of solo entry. Given the increased dependence on domestic material companies and the verification of high-nickel cathode material technology, a positive outlook can be maintained."

There was also advice to view the short-term stock price adjustment caused by the denial as a buying opportunity. Lee Yong-wook, a researcher at Hanwha Investment & Securities, analyzed, "Although concerns about partnerships arose due to the government's refusal to approve overseas expansion, if the stock price falls due to this issue, it should rather be seen as a buying opportunity."

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