"Ecopro BM's Q1 Results Expected to Be Better Than Feared" [Click e-Stock]

North America Remains Sluggish, While Europe Shows Signs of Recovery
Benefit Seen from Rising Lithium Carbonate Prices and Exchange Rate Effects

There is a forecast that Ecopro BM will post results for the first quarter of this year that exceed market expectations. This analysis cites one-off gains from rising lithium carbonate prices and the won-dollar exchange rate, as well as an anticipated rebound in European sales.

On March 26, KB Securities maintained a target price of 250,000 won for Ecopro BM and a 'Buy' investment opinion, based on these factors. The previous day's closing price was 203,000 won.

For the first quarter of this year, the company is expected to report sales of 547.5 billion won and operating profit of 9.3 billion won. Compared to the same period last year, sales are forecast to decline by 13.1%, but operating profit is expected to surge by 310.0%. The sales volume of cathode materials is projected to increase by about 7% compared to the previous quarter. North American sales remain sluggish, as electric vehicle sales by companies such as Ford are declining due to the expiration of the U.S. Inflation Reduction Act (IRA). However, European sales are expected to rebound as front-end customers have largely completed inventory adjustments.

One-off gains are also expected to contribute to performance. As of now, the price of lithium carbonate and the won-dollar exchange rate have risen by 23.9% and 3.8%, respectively, compared to the end of last year. It is estimated that reversal of inventory valuation losses amounting to several billion won will occur. As of the end of last year, the cumulative balance of inventory valuation reserves was 24.9 billion won.

Since the rebound in electric vehicle battery sales by major customers Samsung SDI and SK On is likely to be limited for the time being, the direction of the stock price will depend on supply and demand factors such as expectations for the benefit from KOSDAQ market revitalization policies, as well as the success or failure of new growth industries like energy storage systems (ESS) and humanoid robots. For ESS, the company aims to reduce dependence on Chinese precursors and secure price competitiveness through mass production of cobalt-free LFP precursors. Benefits are also expected from the adoption of all-solid-state batteries in humanoid robots. All-solid-state batteries are expected to demonstrate strengths in energy density, safety, and charging speed, particularly in B2B products like humanoid robots, which are relatively less price-sensitive.

Changmin Lee, a researcher at KB Securities, explained, "Ecopro BM is preparing for mass production of cathode materials for all-solid-state batteries and solid electrolytes, so if this market enters full-scale development, the company will benefit."

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