[Click e-Stock] "WCP Expected to Improve Performance Centered on ESS Separators"

KB Securities Raises Target Price by 82%

On March 18, KB Securities raised its target price for WCP from 11,000 won to 20,000 won, an 82% increase, and also upgraded its investment rating to 'Buy'.

Changmin Lee, a research analyst at KB Securities, explained the reason for the upgrade: "We revised our estimate for the average operating margin from 2023 to 2027 upward from +3.8% to +7.9%, reflecting an expected recovery in utilization rates due to increased shipments of separators for ESS."

WCP's performance for the first quarter of this year is estimated to be sales of 40.8 billion won (a 150% increase year-on-year) and an operating loss of 18.5 billion won (continuation of losses, operating margin -45%). Lee forecasted, "With the end of inventory adjustments by downstream clients and a meaningful level of paid sample sales, shipments of separators for EVs are expected to increase." He added, "However, the start of shipments of separators for NCA ESS has been postponed from March to April, so the increase in separator sales volume compared to the previous quarter is expected to be around +50%." Further, "From the second quarter, the sales performance of separators for NCA ESS will be fully reflected, and as shipments of separators for LFP ESS are also partially included, sales volume is expected to further improve by +31% compared to the first quarter," he added.

Until last year, separators for ESS had not contributed to performance, but with the start of ESS separator shipments in the second quarter of this year, WCP's results are expected to improve noticeably. Lee predicted, "This year's separator sales volume is expected to reach 350 million square meters, a 130% increase compared to last year, with the vast majority of the increased volume estimated to be sold for ESS applications." He particularly expects a trickle-down effect from the expansion of ESS separator shipments to Samsung SDI, a major customer, and pointed out that with the possibility of securing additional customers targeting the North American ESS market, the pace of performance improvement could exceed market expectations.

Lee also stated, "On the other hand, with a 12-month forward price-to-book ratio (PBR) of 0.52 times, valuation remains attractive," adding, "A positive share price trend is expected going forward."

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