[Click eStock] "L&F, Tesla's Key Beneficiary... Continuing to 'Race' This Year"

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[Asia Economy Reporter Kwon Jaehee] KB Securities maintained its 'Buy' rating on L&F on the 19th and raised the target price by 17% from the previous 300,000 KRW to 350,000 KRW.

L&F's first-quarter earnings are estimated at 515.9 billion KRW in sales and 41.3 billion KRW in operating profit. This exceeds market expectations.

Lee Changmin, a researcher at KB Securities, said, "Although there are some concerns due to the shutdown of the Shanghai plant, demand from the Berlin and Texas gigafactories, which began full-scale operation in April, is expected to offset this," adding, "Since a shortage of cathode materials was anticipated in the first half, inventory produced last year is currently being delivered, so sales exceeding 100% operating rate are expected."

This year, L&F's performance is expected to reach 2.7461 trillion KRW in sales and 162.1 billion KRW in operating profit. This represents increases of 183% and 266% respectively compared to the previous year. With the expansion of production capacity at the newly started Guji plant, the sales proportion to Tesla is expected to increase from about 50% in 2021 to 65% in 2022 and 75% in 2023.

The researcher analyzed, "Tesla's brand power, which allows price pass-through to consumers during raw material price increases, is expected to be an advantage compared to other value chains," and added, "L&F is considered the top preferred stock in the secondary battery materials sector."

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