[Into the Stocks] Ecopro BM, Frenzied Race... Solidifying Position as KOSDAQ Leader?

Core Material Manufacturing for Electric Vehicle Batteries
Sales and Operating Profit Increase Over 200%
Regains Market Cap No.1 Surpassing Celltrion Healthcare

[Asia Economy Reporter Kwon Jae-hee] Can Ecopro BM, the leader in secondary batteries, also solidify its position as the top stock on KOSDAQ? Ecopro BM, which manufactures key materials for electric vehicle batteries, is showing a remarkable surge. In its recently announced Q3 earnings report, both sales and operating profit recorded growth rates exceeding 200% compared to the previous year, demonstrating an astonishing growth trend. In the securities industry, investment opinions on Ecopro BM were unusually upgraded to 'strong buy.'

According to the Korea Exchange on the 20th, as of 9:10 AM, Ecopro BM's stock price stood at 104,100 KRW, down 1.98% from the previous trading day. Although Ecopro BM's stock price experienced fluctuations this year, it has risen about 45% since hitting a low on January 28. On the 13th, Ecopro BM reclaimed the top spot in KOSDAQ market capitalization, surpassing Celltrion Healthcare, and currently maintains its position in the 10 trillion KRW market cap club on KOSDAQ.

In the recent one-month period (September 16 to October 18), Ecopro BM was also the most purchased stock by individual investors in the KOSDAQ market. During this period, the trading volume concentrated on Ecopro BM amounted to 2.4041 trillion KRW, and expanding to the beginning of this year, a staggering 23.5983 trillion KRW of funds have been concentrated.

Ecopro BM, which counts Samsung SDI and SK On among its major clients, supplies cathode materials for electric vehicle batteries to Volkswagen, BMW, Ford, Hyundai Motor, Kia, and others. It is the only company in Korea to have established vertical integration in the cathode material business, overseeing affiliates such as Ecopro Materials (precursors), Ecopro Innovation (lithium hydroxide), Ecopro CNG (recycling), and Ecopro AP (high purity and oxygen-nitrogen).

Until now, concerns over profitability deterioration due to falling cathode material prices and issues such as the U.S. rejection of technology exports from Korean cathode material companies had weighed down Ecopro BM's stock price. However, the average selling price (ASP) improved compared to the previous quarter due to price increases in key raw materials like nickel and lithium being reflected in selling prices, and the early operation of new plants increased cathode material shipments, removing downward pressure on the stock price.

With the resolution of concerns, Ecopro BM also posted remarkable earnings. In the Q3 earnings report released on the 18th, Ecopro BM recorded sales of 1.563 trillion KRW, a 283.1% increase year-on-year, and operating profit of 141 billion KRW, up 246.3%. The operating profit exceeded market expectations of 131.2 billion KRW by about 7.4%.

The outlook for future earnings is also bright. The securities industry forecasts Ecopro BM's 2023 sales to be in the mid-7 trillion KRW range and operating profit in the mid-600 billion KRW range, representing increases of about 50-60% compared to the previous year.

Especially as Chinese companies are unable to enter the U.S. market, Ecopro BM, with a high proportion of U.S. production, is expected to directly benefit from the Inflation Reduction Act (IRA). Ecopro BM is reportedly planning to establish production capacity of 180,000 tons (approximately 120 GWh in battery cells) in North America by 2026.

Accordingly, Daol Investment & Securities upgraded its investment opinion on Ecopro BM from 'buy' to 'strong buy.' Jeon Hye-young, a researcher at Daol Investment & Securities, analyzed, "Since Q1 this year, lithium and nickel prices have been reflected in Q3 selling prices, and ASP is estimated to have risen about 15% compared to the previous quarter. Also, the possibility of an increase in expansion scale in the U.S. due to the passage of the IRA law is positive."

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