[Click eStock] "POSCO Chemical, Preparing for Secondary Battery Demand Expansion with Capacity Increase"... Target Price Up

[Asia Economy Reporter Ji Yeon-jin] DS Investment & Securities announced on the 5th that the growth potential of secondary battery material companies has increased, raising the target price of POSCO Chemical to 165,000 KRW.

POSCO Chemical succeeded in raising 1.27 trillion KRW through a rights offering the day before. Accordingly, it is evaluated that proactive expansion in preparation for recent demand growth has become possible. The company currently has an energy material production capacity of 40,000 tons of cathode materials and 44,000 tons of anode materials, and plans to expand this to 270,000 tons of cathode materials and 170,000 tons of anode materials by 2025, and 400,000 tons of cathode materials and 260,000 tons of anode materials by 2030. Through this expansion, it is expected to gain an advantage in securing new customers over competitors in the future. This year, operating profit is estimated to reach 133.1 billion KRW, a 120% increase compared to the previous year, as existing business recovers and the energy materials sector generates profits.

Kim Seung-hoe, an analyst at DS Investment & Securities, said, "Although the refractory and lime chemical businesses, which are existing businesses, continued to slump due to the steel market downturn caused by the spread of COVID-19, the recovery of market conditions is expected after vaccine distribution, improving the performance of existing businesses." He added, "The subsidiary PMC Tech also succeeded in turning a profit in the fourth quarter of last year due to increased operating rates of electric arc furnaces in China, raising expectations for future market conditions."

He continued, "With demand surging, the key now is whether they can stably supply the desired volume at the requested time according to customer demands," adding, "With strengths in funding for expansion and raw material procurement, they are expected to be the winner in the long-term race to target the electric vehicle (EV) market."