[Click eStock] "L&F, Tesla-bound volume to increase further"

[Asia Economy Reporter Kwon Jaehee] IBK Investment & Securities maintained a 'Buy' rating on L&F on the 7th, setting a target price of 330,000 KRW.

L&F's sales for the first quarter of this year are expected to slightly exceed consensus, with revenue of 1.488 trillion KRW and operating profit of 82 billion KRW. The average selling price (ASP) for the first quarter is projected to be similar to that of the fourth quarter of last year, but due to the decline in prices of key metals such as lithium, the price of cathode materials is expected to gradually decrease each quarter. Shipments are expected to increase by 20% with the full-scale operation of the Guji 2 plant, and cathode material shipments in 2023 are anticipated to increase by more than 40% compared to 2022. Profitability is expected to improve compared to the previous quarter as the fixed cost burden is alleviated by the increased operating rate of the Guji 2 plant.

L&F recently announced a high-nickel cathode material supply contract with Tesla. The supply period is two years, from January 2024 to December 2025. The contract amount is 3.8 trillion KRW, with a total supply volume of approximately 70,000 tons. This volume is sufficient to produce 50 GWh of batteries and 600,000 electric vehicles. L&F aims for its 2025 shipment customer composition to be 50% LG Energy Solution, 20% SK On, and 30% OEM. Considering a cathode material capacity of 300,000 tons in 2025, this translates to approximately 150,000 tons for LG Energy Solution, 60,000 tons for SK On, and 90,000 tons for OEM, with additional OEM orders expected.

Hyunwook Lee, a researcher at IBK Investment & Securities, analyzed, "L&F's cathode material capacity targets are 130,000 tons by the end of this year, 220,000 tons in 2024, and 400,000 to 430,000 tons in 2026. Correspondingly, sales are expected to reach 7 trillion KRW this year, 10 trillion KRW next year, and 26 trillion KRW in 2026." He added, "Tesla plans to increase its own battery volume in the long term, so the volume of cathode materials directly supplied by L&F to Tesla is expected to increase further."

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