[Click eStock] Cheonbo, 4Q Earnings Exceed Expectations... "Secondary Battery Electrolyte Drives Growth"

2nd Battery Established as a Trend... Strong Performance Expected Again This Year
Electrolyte Demand Growth Outpaces Facility Expansion Speed

[Asia Economy Reporter Minwoo Lee] Cheonbo is expected to post results exceeding market expectations in the fourth quarter of last year, driven by the strong performance of its secondary battery electrolyte business.

On the 20th, Korea Investment & Securities forecasted that Cheonbo would achieve consolidated sales of 45.1 billion KRW and operating profit of 9.5 billion KRW in the fourth quarter of this year. This represents increases of 34% and 38%, respectively, compared to the same period last year. Operating profit is estimated to exceed market consensus by 15%. The rise in performance is attributed to increased demand for secondary battery electrolytes.

Demand for P electrolyte (LiPO2F2) is strong across all regions including China, Europe, and domestic markets, while demand for F electrolyte (LiFSI) is also clearly recovering. In particular, P electrolyte demand exceeded expectations, leading to the use of F electrolyte production facilities to produce P electrolyte as well, maximizing utilization rates and profit margins. The sales proportion of secondary battery materials exceeded 60%, and the operating profit margin reached 20%. Operating profit from secondary battery materials was 5.4 billion KRW, an 83% increase from the previous quarter, showing significant contribution. Despite a decrease in semiconductor material sales, electronic materials sales are expected to be similar to the same period last year due to strong LCD panel market conditions and increased demand for OLED materials.

The outlook for this year is also positive, as electrolyte demand is growing faster than the pace of production facility expansion. P electrolyte demand is expected to remain strong in the first quarter. Although there are many competitors for F electrolyte, the overall electrolyte demand in the secondary battery industry is rapidly increasing. There is also a possibility that some Cheonbo production line expansions may be brought forward. Researcher Jeonghwan Kim of Korea Investment & Securities explained, "New products such as D electrolyte (LiDFOP) and B electrolyte (LiBOB) will be shipped in earnest from the first half of the year," adding, "Demand for special electrolytes to improve secondary battery performance is steadily increasing."

Accordingly, Korea Investment & Securities forecasted that Cheonbo will achieve sales of 47.6 billion KRW and operating profit of 9.8 billion KRW in the first quarter of this year, representing increases of 24% and 36%, respectively, compared to the same period last year. While profit growth is expected to be steadily maintained, the effect of capacity expansion in the second half of the year is anticipated to increase operating profit by 74% compared to last year.

Against this backdrop, Korea Investment & Securities maintained a "Buy" investment rating and a target price of 250,000 KRW for Cheonbo. The closing price on the previous day was 191,700 KRW.