[Click eStock] "SKC, Realizing Economies of Scale through Expansion of Overseas Production Bases"

Ebest Investment & Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Ebest Investment & Securities raised the target price for SKC from 132,000 KRW to 189,000 KRW on the 27th, citing the expansion plans for overseas copper foil production bases and economies of scale, maintaining a 'Buy' investment rating.

On the 26th, SKC announced that it will establish its first overseas copper foil production plant in Malaysia with an investment of 650 billion KRW. The purpose of entering Malaysia is to respond to the increasing demand for electric vehicle (EV) batteries. Starting with Malaysia, SKC plans to expand its overseas production plants to Europe and the United States, aiming to increase its scale more than fivefold by 2025.

Anna Lee, an analyst at Ebest Investment & Securities, said, "The site secured by SKC in Malaysia is about 400,000 m2, allowing for additional expansion," adding, "However, China was not included on the list as a production base due to the already large number of copper foil companies there and considerations such as customer accessibility, logistics costs, and electricity expenses."

The Malaysian plant is expected to improve productivity by adopting know-how such as artificial intelligence (AI) and automation facilities introduced at domestic plants. Additionally, to proactively respond to requests from global major clients, the Malaysian plant plans to implement 'RE100.' RE100 is a campaign where companies supply 100% of their production electricity from renewable energy.

Domestic production capacity is also expected to expand to 52,000 tons. The Jeongeup Plant 5 is scheduled to be completed in the second half of this year, and Plant 6 in early next year. When combined with the production capacity of the Malaysian plant, SKC will have about 100,000 tons of production capacity. The analyst explained, "Growth centered on copper foil is possible through economies of scale."