[Click eStock] "Cheonbo, Improving from the Second Half of the Year"

Daishin Securities Report
Impact of Demand Recovery and New Capacity Operation

Daishin Securities maintained a buy rating and a target price of 300,000 KRW for Cheonbo on the 16th, based on an analysis that earnings are expected to improve from the third quarter.

The company's expected sales for the second quarter are 49 billion KRW, and operating profit is projected at 2.3 billion KRW, representing decreases of 25% and 81% respectively compared to the same period last year. The secondary battery materials segment is expected to continue underperforming due to weak demand in China and price declines.

Sales in the secondary battery materials segment are predicted to be 31.8 billion KRW, with operating profit at 1 billion KRW, down 14% and 86% respectively year-on-year. Jeon Chang-hyun, a researcher at Daishin Securities, explained, “During the first half of the year, the electrolyte shipments of companies with a high sales ratio to China sharply declined due to inventory depletion amid a temporary oversupply in the Chinese battery market.” He added, “The continuous decline in LiPF6 electrolyte market prices since the beginning of the year has made a drop in the company’s selling prices inevitable.”

However, demand recovery is expected from the second half of the year due to a market turnaround. Recently, prices in the Chinese materials market have rebounded, indicating that inventory adjustments in the Chinese battery market are nearing completion. The price of LiPF6 was 16,000 KRW per kg in May but has risen to 30,000 KRW this month.

Production volume is also increasing, which is expected to expand the company’s scale. In the third quarter, large-scale new production is anticipated with 1,000 tons of P electrolyte, 5,000 tons of VC, 5,000 tons of FEC, and in the fourth quarter, 9,000 tons of F electrolyte. The company’s expected operating profit is 8.5 billion KRW in the third quarter and 18.2 billion KRW in the fourth quarter, representing increases of 262% and 115% quarter-on-quarter, respectively.

Researcher Jeon stated, “Based on the current stock price, the 2025 PER (price-to-earnings ratio) is only 15 times, which is undervalued compared to the average PER of 30 times for secondary battery materials companies,” and added, “Considering the company’s value, this is a comfortable buying range.”

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