Among Battery-Related Companies, This Firm's Target Price Is Raised [Click e-Stock]

On April 16, Heungkuk Securities raised its target price for Lotte Energy Materials to 61,000 won, reflecting the outlook for increased copper foil sales, and maintained its "Buy" investment opinion.

Jinsoo Jung, an analyst at Heungkuk Securities, stated in a report, "Copper foil sales are expected to gradually increase throughout the year due to the effects of new supply."

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Lotte Energy Materials' sales in the first quarter of this year are projected to reach 174.7 billion won, a 10.6% increase compared to the same period last year, and its operating loss is expected to narrow to 20.2 billion won. This figure is better than the market consensus, which had anticipated an operating loss of 25.7 billion won. Analyst Jung explained, "Although downstream demand remains stagnant, the operating loss has been reduced thanks to favorable exchange rates and higher selling prices."

In the materials division, total copper foil sales volume is estimated to grow by 1.1% quarter-on-quarter, with both battery foil and circuit foil expected to remain at similar levels to the previous quarter. In the construction division, sales are expected to decline by 5.1% quarter-on-quarter, affected by the off-season and the ongoing downturn in the domestic construction market.

However, new supply is expected to drive copper foil sales higher starting in the second half of the year. Analyst Jung noted, "From the end of the second quarter, shipments of battery foil for Chinese battery cell makers will begin, and supply of ESS battery foil for North American customers is also expected to be possible in the second half." He added, "For circuit foil, starting in the second half when domestic factory production lines are converted, supply of HVLP grades 3 to 4 high-end copper foil will begin, contributing to overall corporate profitability improvement." Through this new supply, fourth-quarter copper foil shipments are expected to more than double those of the first quarter.

Analyst Jung further commented, "We believe that the improved product mix driven by a higher proportion of high-value-added circuit foil sales will serve as a basis for raising the company's valuation."

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