[Click e-Stock] "SungEel HiTech, Recovery Signals Visible... Investment Rating and Target Price Raised"

Investment Rating Upgraded from 'Neutral' to 'Buy'
Target Price Raised from 34,000 Won to 47,000 Won

On November 26, Hanwha Investment & Securities reported that recovery signals for SungEel HiTech are becoming visible. The firm raised its target price from 34,000 won to 47,000 won and upgraded its investment rating from 'Neutral' to 'Buy'.

Lee Yonguk, a researcher at Hanwha Investment & Securities, stated, "The recycling industry has faced difficult times due to weak metal prices, challenges in securing raw materials, and reduced policy support. However, metal prices are now rebounding, and the supply of raw materials is also improving. Although metal prices remain lower and the financial structure has deteriorated compared to 2021 and 2022, we expect that from 2026, smoother raw material procurement will lead to rapid improvements in utilization rates and performance."

In the third quarter of this year, SungEel HiTech recorded sales of 43.8 billion won and an operating loss of 12.3 billion won. Lee explained, "Due to the high base effect from pushed shipments in the second quarter, both sales volume and revenue declined in the third quarter. However, as high-cost, non-performing inventory was cleared in the second quarter, profitability improved in the third quarter."

Hanwha Investment & Securities estimates SungEel HiTech's fourth-quarter results at 50.8 billion won in sales and an operating loss of 9.2 billion won. Lee added, "We expect EBITDA in the fourth quarter to turn positive at 900 million won. Although sales volume is expected to remain similar to the second quarter due to year-end inventory adjustments by customers and limited raw material input, rising metal prices and exchange rates should continue to drive profitability improvements."

Since October, metal prices have been strong. In November, cobalt prices rose to 48 dollars per kilogram, and lithium reached 13 dollars per kilogram, compared to 33 dollars and 10 dollars, respectively, in the third quarter. Lee noted, "After the Democratic Republic of Congo, the world's largest cobalt producer, announced an export ban in February and implemented an export quota system in October, prices have surged twice. The export quota is expected to continue through 2026 and 2027. Although the global lithium supply remains excessive, strong demand from electric vehicles and energy storage systems (ESS) in Europe and China is raising expectations for improved supply-demand dynamics. Overall, metal prices are expected to show a gradual upward trend."

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