Institutions Cry Over Secondary Batteries and Smile at AI

Analysis of Top Net Purchase Stocks on KOSDAQ Until the 23rd This Year
Losses Widened Due to Investments in L&F and Ecopro BM
Successful AI Stock Investments in Hangul and Computer and ASIC Land

Domestic institutional investors have been focusing their investments on the secondary battery sector and artificial intelligence (AI)-related stocks in the KOSDAQ market since the beginning of this year. While the secondary battery sector experienced larger losses due to weaker-than-expected fourth-quarter earnings, AI-related stocks have recorded valuation gains thanks to their soaring performance since early this year.

According to the financial investment industry on the 24th, institutional investors purchased L&F shares worth 177.3 billion KRW in the KOSDAQ market from the 2nd to the 23rd. The average purchase price per share was 199,814 KRW, which is 9.6% higher than the previous day's closing price of 180,600 KRW.

L&F, which produces cathode active materials for secondary batteries, recorded an operating loss of 280.4 billion KRW in the fourth quarter of last year, turning to a deficit compared to the same period the previous year. Its sales dropped by 47.2% to 646.8 billion KRW. While it is expected that the company will continue to operate at a loss through the first quarter of this year, the Yeouido securities market anticipates that L&F’s performance will hit bottom in the first half and improve from the second half of this year.

Lee Yong-wook, a researcher at Hanwha Investment & Securities, explained, "There is a high possibility of shipping more than 170,000 tons of cathode materials starting next year," adding, "Along with its undervaluation appeal, it is expected that the undervaluation factors will be resolved once it transfers to the KOSPI market."

Institutions appear to be concentrating their purchases of L&F shares ahead of its planned transfer listing to the KOSPI market. Along with L&F, EcoPro BM shares also recorded net purchases worth 69.8 billion KRW. EcoPro BM’s valuation return is -19.4%. The stock price has continued to decline amid a contraction in the electric vehicle market and intensified competition. Jang Jung-hoon, a researcher at Samsung Securities, analyzed, "Since the fourth quarter of last year, electric vehicle demand has slowed, leading to a reduction in cathode material purchases by major battery customers," adding, "Looking at the business conditions of Samsung SDI and SK On, which are cathode material customers, they likely have not escaped the impact of reduced purchase volumes from North American automakers." He further noted, "Among the main materials for cathode materials, lithium prices fell by 44% in the fourth quarter," adding, "The scale of inventory valuation losses inevitably increases."

Unlike institutions that lost face by investing in leading domestic secondary battery stocks such as L&F and EcoPro BM, institutions investing in AI-related stocks are contemplating the timing of profit-taking. Since the beginning of this year, institutions have been actively net buying AI-related stocks including Hangul and Computer, Aiceland, MLO, Flitto, and ESTsoft.

Hangul and Computer, with purchases worth 31.4 billion KRW, has a valuation return of 41.2%. Kim Hak-jun, a researcher at Kiwoom Securities, analyzed, "The biggest advantage of the GPT Store is that even the general public can create applications (apps)," adding, "The AI related to documents, which is Hangul and Computer’s core technology, is expected to attract attention." He further predicted, "They will expand into overseas markets through the GPT Store," and "They are securing technological capabilities through mergers and acquisitions (M&A), making additional growth possible by utilizing surplus funds."

Flitto, a language data sales company, is also one of the companies expected to increase in corporate value alongside the growth of the AI industry. Lee Byung-hwa, a researcher at Shinhan Investment Corp., analyzed, "Major IT and internet companies are collaborating with Flitto to prepare AI services," adding, "The demand for data input and correction of errors in large language models (LLM) is explosively increasing to advance AI." He emphasized, "Until AI provides perfect answers without errors, AI service companies must input numerous corpora and error correction values."

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