[Click e-Stock] "Cosmo Advanced Materials & Technology, Downstream Demand Weakens... Investment Rating Lowered"

by Kwon Hyeonji

Published 19 Nov.2025 08:37(KST)

On November 19, IBK Investment & Securities announced that it is lowering its investment rating on Cosmo Advanced Materials & Technology to 'Trading Buy,' reflecting a downward revision of earnings estimates due to weakening demand from downstream industries.

Lee Hyunwook, an analyst at IBK Investment & Securities, stated in a report released that day, "The secondary battery industry has continued to deteriorate since peaking in 2023, and unfavorable market conditions are expected to persist next year as well." He added, "A full-scale earnings recovery is anticipated in the first half of 2027." The target price was set at 50,000 won.

In the third quarter, Cosmo Advanced Materials & Technology reported revenue of 105.3 billion won (down 12.4% quarter-on-quarter), operating profit of 130 million won (down 74.5%), and an operating margin (OPM) of 0.1% (down 0.3 percentage points), all falling short of consensus estimates (revenue of 114 billion won and operating profit of 600 million won).

Revenue from the company’s core business, the cathode materials division, reached 75 billion won (down 16.1% quarter-on-quarter). Shipments of cathode materials for Samsung SDI, which had been suspended since the third quarter of 2024, resumed in the first quarter of this year and have been gradually increasing each quarter. In contrast, shipments of single-crystal cathode materials for LG Chem have been gradually declining due to weakening demand from downstream industries.

There was a significant change in the revenue mix by client. While LG accounted for 100% of sales in the third quarter of 2024, by the third quarter of 2025, LG Energy Solution accounted for 20% and Samsung SDI for 80%. Profitability remained at the break-even point (BEP) as the cathode materials division continued to post losses due to lower utilization rates.

The analyst also forecast that a conservative approach is needed for fourth-quarter results. Fourth-quarter revenue is expected to be 107.9 billion won (up 2.5% quarter-on-quarter), operating profit 500 million won (up 300.3%), and OPM 0.5% (up 0.4 percentage points). However, shipments in the cathode active materials division are projected to decrease by 5% compared to the third quarter. He explained, "Demand for power tools and IT applications remains solid, but demand for electric vehicles (EVs) is weak."

Of particular concern is that the timeline for key investment momentum continues to be pushed back. Shipments of energy storage systems (ESS) for Samsung SDI are now expected to be possible only after 2026 due to delays in specification changes. In addition, while cathode materials production capacity (CAPA) was expected to increase from 30,000 tons in 2024 to 100,000 tons in 2025 (20,000 tons for ESS and 80,000 tons for EVs), the start of operations for the third plant (65,000 tons), despite completion of line testing, has been postponed to the second half of 2026 due to concerns over slowing demand in the EV market.