[MarketING] Ecopro Tastes the Emperor Stock, Slumps Amid Poor Earnings

KOSPI and KOSDAQ Rise for Two Consecutive Days
EcoPro and EcoPro BM Fall Over 5% Due to Poor Earnings

The KOSPI and KOSDAQ continued their upward trend for the second consecutive day, but the gains were limited as investors remained cautious ahead of the U.S. June Consumer Price Index (CPI) announcement. Foreign investors and institutions drove the KOSPI's rise, while individual investors led the KOSDAQ's increase. EcoPro, which briefly surged past 1 million KRW intraday to become a 'Hwangjeju' (Emperor Stock), showed weakness due to disappointing second-quarter earnings, suggesting it will take more time to reclaim its status as a Hwangjeju.

KOSPI Rises for Second Day... Recovers to 2570 Level

On the 12th, the KOSPI closed at 2,574.72, up 12.23 points (0.48%) from the previous day. The KOSDAQ ended the day at 879.88, rising 1.15 points (0.13%). Both indices started lower but managed to rebound.

Foreign investors and institutions led the KOSPI's gains, while individual investors drove the KOSDAQ's rise. On this day, foreign investors net purchased 215.8 billion KRW in the securities market. Institutions bought 29.2 billion KRW. Conversely, in the KOSDAQ market, foreign investors and institutions net sold 193.8 billion KRW and 95 billion KRW, respectively. Individual investors sold 253.1 billion KRW in the securities market but net bought 285.6 billion KRW in the KOSDAQ market.

Seokhwan Kim, a researcher at Mirae Asset Securities, analyzed, "Ahead of the U.S. June CPI announcement, a wait-and-see stance prevailed, causing the market to fluctuate around the flat line during the session. Expectations for price stability and the increased likelihood of the Bank of Japan adjusting its monetary policy led to a stronger yen, with the won and yuan exchange rates following suit." In the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,288.7 KRW, down 5.0 KRW from the previous day.

[Image source=Yonhap News]

Despite the index gains, secondary battery stocks showed weakness. LG Energy Solution closed at 534,000 KRW, down 2.91% from the previous day. EcoPro BM (5.42%) and EcoPro (5.74%) both fell by over 5%, while L&F declined 1.69%. Researcher Kim said, "Selling pressure increased due to individual company issues such as LG Energy Solution and EcoPro, leading to weakness in secondary battery stocks."

LG Energy Solution's stock decline was driven by concerns over supply pressure from LG Chem's issuance of exchangeable bonds (EB). LG Chem announced after market close the previous day that it would issue $2 billion (approximately 2.6 trillion KRW) worth of foreign currency EB using shares of its subsidiary LG Energy Solution. LG Chem is the largest shareholder, holding 81.84% of LG Energy Solution.

The exchange price will be based on LG Energy Solution's closing price of 550,000 KRW on the 11th, with a high premium of 25-30% for 5-year bonds and 30-35% for 7-year bonds. If fully exchanged, the target would be approximately 3,695,000 shares, representing about 1.6% of LG Energy Solution's total issued shares.

EcoPro's Ascension to Hwangjeju Delayed Due to Poor Earnings

EcoPro, which was on the verge of becoming a Hwangjeju, saw its stock weaken due to disappointing earnings, delaying its rise to Hwangjeju status.

Previously, EcoPro briefly rose to 1,015,000 KRW intraday on the 10th, reaching Hwangjeju status, but it has yet to secure that position based on closing prices.

On this day, EcoPro announced preliminary second-quarter consolidated operating profit of 166.4 billion KRW, down 2.1% year-on-year. Sales for the same period increased 63.4% year-on-year to 2.0132 trillion KRW. These results fell short of market expectations. According to financial information provider FnGuide, EcoPro's second-quarter consensus estimates were 2.1776 trillion KRW in sales and 225 billion KRW in operating profit.

EcoPro BM's second-quarter results also missed expectations. EcoPro BM posted a 114.7 billion KRW operating profit on a consolidated basis, up 11.5% year-on-year. Sales rose 60.2% to 1.9062 trillion KRW. The consensus estimates for EcoPro BM's second quarter were 2.1504 trillion KRW in sales and 128.9 billion KRW in operating profit.

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