[Click eStock] "E&Di, Growth in Catalyst System Sector... Annual Sales Expected to Reach 100 Billion KRW"

Hana Financial Investment Coverage Initiated
Operating Profit of 23.1 Billion KRW This Year... Up 136% YoY

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 21st issued a buy rating and a target price of 36,100 KRW for E&Di. This is based on the expectation of business expansion in the catalyst system sector and the anticipation that the new business of cathode precursor materials will be in full swing starting next year.

Last March, the government passed the Fine Dust Disaster Act and allocated a budget of 2.2 trillion KRW for public safety measures against fine dust. Of this, the largest portion, 800 billion KRW, was announced to support reduction measures for old diesel vehicles, construction machinery, and small-scale workplaces.

Specifically, through the vehicle emission reduction project by 2024, the government plans to support the installation costs of reduction devices (catalyst systems) for approximately 80,000 Grade 5 vehicles annually. Currently, there are about 2.47 million Grade 5 vehicles nationwide, and demand for catalyst systems is expected to continue beyond 2024.

E&Di has secured 100% proprietary core technology in the catalyst system sector. In terms of sales, it recorded 14.9 billion KRW in 2018 and increased to 37.3 billion KRW last year. This year, sales are expected to reach 64.9 billion KRW, representing approximately 74% growth compared to last year.

Sales are also expected to grow significantly, with 29.2 billion KRW recorded this year compared to 7.4 billion KRW in 2019 and 18.9 billion KRW last year. Next year, sales are projected to reach around 53.9 billion KRW.

Jungki Lee, a researcher at Hana Financial Investment, said, "The catalyst market is expected to grow alongside the expansion of the catalyst system market, and market share in the replacement catalyst market has increased," adding, "This is believed to be due to entry into the domestic new car catalyst market worth 3 trillion KRW."

E&Di's sales this year are forecasted to reach 100.7 billion KRW, and operating profit 23.1 billion KRW, increasing by 72.7% and 135.7% respectively compared to last year. Researcher Jungki Lee stated, "Strengthened fine dust countermeasures will enable catalyst systems and catalysts to generate stable cash flow with annual sales of around 100 billion KRW," and added, "The expansion into new businesses such as old engine replacement, new car and replacement catalysts, and cathode precursor materials also provides positive growth momentum."