[Click eStock] "EcoPro BM, Aggressive Investment and Expectations for European Expansion"

Yuanta Securities "Target Price Raised to 250,000 Won"
Expected Benefit from Samsung SDI's Increased Market Dominance

[Asia Economy Reporter Gong Byung-sun] An analysis has emerged that Ecopro BM is undervalued despite its aggressive expansion plans. It is expected to expand its market dominance in line with Samsung SDI's entry into Hungary.

On the 14th, Yuanta Securities raised the target price for Ecopro BM from the previous 220,000 KRW to 250,000 KRW, maintaining a 'Buy' rating.

Attention is focused on whether Ecopro BM's European plant expansion will signal its entry into the European market. Ecopro BM's new European plant, CAM7, is scheduled to begin construction in the second half of this year. The initial investment scale was estimated at about 30,000 tons, but in the mid to long term, it is expected to increase to about 110,000 tons in line with the expansion speed of Samsung SDI's Hungarian production capacity. Kim Kwang-jin, a researcher at Yuanta Securities, said, "Recently, Volkswagen confirmed the growth potential of prismatic batteries through its Power Day," adding, "Since Samsung SDI's market dominance is expected to increase, it is necessary to give a premium to Ecopro BM as a major cathode material vendor for Samsung SDI."

Aggressive investment is also an expected factor. Ecopro BM has set an expansion plan of 90,000 tons this year. Next year, it plans to continue aggressive expansion with 105,000 tons in 2022, 130,000 tons in 2023, and 180,000 tons in 2024. In particular, although there were doubts about the growth potential of major customers Samsung SDI and SK Innovation recently, Samsung SDI has branded prismatic batteries, and SK Innovation has confirmed its growth potential by reaching a settlement in litigation.

The expected performance for the first quarter of this year is forecasted to meet market consensus. Researcher Kim said, "Ecopro BM's sales in the first quarter of this year are expected to rise 70% year-on-year to 285 billion KRW, and operating profit is expected to increase 97.6% year-on-year to 17.4 billion KRW," explaining, "Both nickel-cobalt-aluminum (NCA) and nickel-cobalt-manganese (NCM) cathode materials are expected to show solid performance compared to the previous quarter."