[Click eStock] "Cheonbo, marking the end of de-China strategy, expected to benefit from IRA... Target price up"

[Asia Economy Reporter Myunghwan Lee] Korea Investment & Securities announced on the 16th that it maintains a buy rating on Cheonbo and raises the target price by 26% from the previous 270,000 KRW to 340,000 KRW. This is based on the expectation that the company will benefit from the Inflation Reduction Act (IRA).

Korea Investment & Securities diagnoses Cheonbo as a direct beneficiary of the U.S. Inflation Reduction Act. Since the IRA excludes the use of Chinese-made materials and components, the U.S. is compelled to diversify the supply chain of electrolytes and their raw materials, which have a high proportion of Chinese origin, to Korea and Japan. Korea Investment & Securities evaluates that Cheonbo’s ability to mass-produce lithium salts and additives, which are raw materials for electrolytes, in Korea will be highlighted.

They also foresee benefits as the company mainly produces secondary battery materials, which are difficult to manufacture. The F electrolyte (LiFSI) lithium salt, which Cheonbo is preparing for mass production of 5,000 tons in the second half of next year, is increasingly favored by OEMs and secondary battery companies aiming to improve battery performance. Cheonbo is expected to reduce costs by up to 50%, narrowing the price gap with the existing mainstream lithium salt (LiPF6) while gaining price competitiveness. Since only one company each in Korea and Japan mass-produces LiFSI due to its manufacturing difficulty, Korea Investment & Securities anticipates increased demand for Cheonbo’s products from North American companies.

They also diagnose that market interest is rising as Cheonbo pursues transformation into a comprehensive electrolyte raw material company. This is because it can be evaluated not as a company that develops specific products and supplies them to clients, but as one that can supply various lithium salts and additives in sufficient quantities. Accordingly, they expect the U.S., which demands decoupling from China, to select Cheonbo as a key supplier of electrolyte raw materials.

Junghwan Kim, a researcher at Korea Investment & Securities, analyzed, "From 2023, Cheonbo’s sales proportion to North America will increase, and the growth rate of North American secondary batteries will begin to accelerate," adding, "It will be possible to assign a high valuation again."

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