[Click eStock] "L&F, Q1 Loss Expected This Year... Target Price Down"

Shinhan Investment Corp. on the 2nd forecasted that L&F will record a loss in the first quarter of this year due to pressure from price declines and inventory revaluation losses, and lowered the target stock price from 180,000 KRW to 170,000 KRW. The investment rating was maintained at 'Buy.'

Jung Yong-jin, a researcher at Shinhan Investment Corp., explained, "Considering that plans for overseas expansion or securing a new domestic plant may be somewhat delayed, we adjusted the target stock price," adding, "To drive stock price growth, momentum related to securing large-scale orders or new products (precursors, anode materials, etc.) that can restart growth speed is necessary."

L&F recorded sales of 657.6 billion KRW in the fourth quarter of last year, a 46% decrease compared to the same period last year, and turned to an operating loss of 280.4 billion KRW. Researcher Jung analyzed, "Sales declined due to a 43% drop in volume, and a large inventory revaluation loss occurred along with a temporary drop in operating rate, resulting in a pure operating loss excluding accounting effects."

In the first quarter of this year, volume recovery is expected to begin, but losses are projected to continue following the previous quarter due to ongoing pressure from price declines and inventory revaluation losses. Shinhan Investment Corp. estimated L&F's first-quarter sales to increase by 15% from the previous quarter to 755 billion KRW, with an operating loss of 121.4 billion KRW. Researcher Jung stated, "The problem is that metal prices have fallen lower than expected at the end of last year," explaining, "The inventory revaluation loss of 250.8 billion KRW recognized last year was based on a lithium carbonate price of 37 USD per kg, but as lithium carbonate prices hover around 14 to 15 USD per kg this year, a large inventory revaluation loss is latent. We assumed related costs of 80 to 100 billion KRW will be reflected in the first half of the year."

It is an opinion that now is the time to focus on strengthening fundamentals. Researcher Jung said, "Amid increased volatility in electric vehicle demand, L&F has already secured a 200,000-ton production system with the completion of Plant 3 in Guji," adding, "For the time being, it is a time to focus on strengthening fundamentals rather than investment and expansion."

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