[Click eStock] "EcoPro BM, the Run Continues"

Yuanta Securities maintained a ‘Buy’ rating on Ecopro BM on the 3rd and raised the target price from the previous 210,000 KRW to 261,000 KRW.

Ecopro BM is expected to achieve significant top-line growth this year with sales of 8 trillion KRW and operating profit of 583 billion KRW. Sales are projected to increase by 51% year-on-year, and operating profit by 52%. Although there will be some price decline effects due to continued weak demand in the power tools segment in 2023, exchange rate fluctuations, and a drop in average selling price (ASP), these impacts are expected to be limited, with volume (Q) growth having a greater effect. This year, Ecopro BM will fully reflect the operation of CAM5N (30,000 tons) and start mass production of CAM7 (54,000 tons) within the year, driving continued growth centered on the electric vehicle (EV) market. Recent order wins from Samsung SDI for GM, as well as additional orders from Volvo, are expected to provide further momentum. In particular, due to tight supply and demand in the US market, long-term binding contracts are underway, raising expectations for Ecopro BM to secure long-term binding contracts exceeding 10 years. The announcement of detailed provisions of the US Inflation Reduction Act (IRA) is expected to concretize North American investment plans.

The rapid surge in secondary battery stocks, including Ecopro BM, has already led to valuation pressures. Especially for Ecopro BM, the stock price has risen by 140% compared to the beginning of the year, increasing valuation concerns. Although a short-term price correction is possible due to the rapid price increase, as it is a representative growth industry and a top market capitalization sector on KOSDAQ, the correction period is expected to be short. Therefore, despite the possibility of a short-term price correction given the highest stock price increase within the secondary battery sector, the duration and magnitude of the correction are expected to be limited. Additionally, with the inclusion of cathode active materials as critical minerals in the detailed provisions of the US IRA, uncertainties regarding the regions of cathode material companies have been resolved, and announcements of capacity expansions are expected to continue, which will again attract investor attention.

Researcher Ianna from Yuanta Securities analyzed, “Although there is short-term stock price volatility due to the recent sharp rise in Ecopro BM’s stock price, there remains upside potential driven by top-line growth from production capacity expansion and order momentum in the US market.”

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