[Click e-Stock] "L&F Expected to Grow Centered on High-Nickel Products... Target Price Raised"

DS Investment & Securities Raises L&F Target Price to 350,000 Won

On May 6, DS Investment & Securities raised its target price for L&F from 250,000 won to 350,000 won, maintaining its 'Buy' recommendation, citing expectations for growth centered on high-nickel products.

In the first quarter, L&F recorded sales of 739.6 billion won (up 103% year-on-year) and operating profit of 117.3 billion won (up 42.2%). Operating profit significantly exceeded the market consensus of 60.7 billion won.

DS Investment & Securities attributed these results to strong sales, rising prices, and the reversal of inventory valuation losses (92.6 billion won). The average selling price (ASP) for the product mix increased by 4% quarter-on-quarter, with high-nickel products rising by 2% and mid-nickel products by 14% during the same period. Total shipments increased by 12%, with high-nickel shipments up 13% and mid-nickel shipments remaining at similar levels to the previous quarter. Choi Taeyong, analyst at DS Investment & Securities, commented, “In particular, the expansion of models applying Ni95 (nickel content 95%), increased sales of long-range vehicles, and the growth in 46mm cylindrical battery shipments were key drivers for high-nickel products.”

The favorable trend in both volume and price is expected to continue in the first half of the year. DS Investment & Securities forecasts second-quarter sales of 891.2 billion won (up 71.3% year-on-year) and operating profit of 43.1 billion won (a turnaround into the black). Analyst Choi stated, “As of the end of the first quarter, the remaining balance of inventory valuation allowance stood at 133.0 billion won. If this is reversed, our estimates could be revised upward. However, with lithium prices likely to remain in the 20–22 dollar per kilogram range, the scale of reversals is expected to decrease. We also expect the ongoing strength in metal prices to be reflected in a further increase in blended ASP.” He added, “The strong shipment trend, especially for Ni95, is expected to continue, supporting growth centered on high-nickel products.” Conversely, he anticipated that shipments of mid-nickel products would decline due to adjustments by client companies.

In the mid to long term, growth is expected to be driven by 46mm cylindrical batteries and lithium iron phosphate (LFP) products. DS Investment & Securities expects that the expansion of 46mm batteries within Tesla will be a positive factor, and that concerns about competitors’ short-term re-entry into the Ni95 segment will remain limited. Regarding LFP, the outlook for business visibility is expected to improve, led by orders from Samsung SDI. Analyst Choi concluded, “Considering the improved business visibility, we are reducing the valuation discount rate and raising our target price.”

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