Rapid Growth Expected in Demand for Electric Vehicle Charging Stations and Renewable Energy ESS
Expansion of Medium and Large Battery Pack Business Following Smartphones
Performance Improvement Anticipated This Year... Success in New Business
[Asia Economy Reporter Hyungsoo Park] As the inauguration of US President-elect Joe Biden approaches, expectations are growing that the electric vehicle battery industry and renewable energy sectors will benefit. This is why there is increasing optimism about the performance improvement prospects of Elantec, which produces battery packs used in smartphones and energy storage systems (ESS).
According to the Financial Supervisory Service on the 8th, Elantec recorded cumulative sales of 483.3 billion KRW and operating profit of 10.5 billion KRW up to the third quarter of last year. Compared to the same period last year, sales and operating profit decreased by 17.4% and 68.1%, respectively. This was due to a decline in sales from its subsidiaries in Vietnam and India. By product category, sales in the smartphone case segment dropped by about 100 billion KRW compared to the previous year. This was a result of the Indian government's lockdown measures to curb the spread of the novel coronavirus (COVID-19), which caused a sharp decline in smartphone sales.
However, Elantec's performance rapidly recovered in the second half of the year. In the third quarter, it recorded sales of 210.6 billion KRW and operating profit of 14.3 billion KRW. Compared to the same period last year, sales and operating profit decreased by 2.8% and 0.2%, respectively. This exceeded market expectations.
The financial investment industry expects Elantec's performance improvement to accelerate from the third quarter of last year. They anticipate that the normalization of the existing smartphone business division will be complemented by results from new business divisions.
Elantec is entering the medium-to-large battery pack market based on its production technology for small battery packs used in smartphones and laptops. Medium-to-large battery pack sales are expected to begin in earnest this year. These medium-to-large battery packs are used in electric vehicles and ESS.
There are forecasts that the ESS market will grow rapidly, especially in the North American region. Under the Green New Deal policy framework, US President-elect Biden has planned to invest about 2 trillion dollars in eco-friendly energy research and development and the construction of low-carbon infrastructure. As renewable energy generation is expected to surge, demand for energy storage systems (ESS) is also likely to increase. Renewable energies such as solar and wind generate electricity that is stored in ESS. SNE Research forecasts that the North American ESS market size will grow more than fourfold from 8.4 GWh last year to 36.9 GWh by 2025.
ESS is also necessary for electric vehicle charging infrastructure. Biden has pledged to install approximately 500,000 electric vehicle charging stations across the United States. His goal is to redesign the US transportation system to be centered on electric vehicles.
ESS is indispensable in renewable energy and electric vehicle charging infrastructure. Expectations are growing that Elantec's strategy to expand ESS battery pack production, recognized for its technology in producing smartphone battery packs, will lead to increased sales this year. Doohyun Kim, a researcher at Hana Financial Investment, analyzed, "Elantec's sales and operating profit are expected to increase by about 29% and 150%, respectively, compared to the previous year," adding, "As sales of secondary battery packs increase, there is a high possibility of surpassing the record high performance set in 2019."
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