[Click eStock] Cosmo Advanced Materials, Positive Cycle for Anode Materials and MLCC Films

[Asia Economy Reporter Lee Seon-ae] The mid- to long-term performance outlook for Cosmo Advanced Materials, a company specializing in cathode materials for secondary batteries and release films for MLCC, appears positive.

According to Kiwoom Securities on the 22nd, Cosmo Advanced Materials' sales this year are expected to increase by 83% to 373.2 billion KRW, and operating profit is projected to rise by 121% to 27.4 billion KRW. Based on this year's and next year's expected performance, the price-to-earnings ratio (PER) is 29 times and 18 times respectively, which is considered attractive compared to the domestic cathode material top three average of 112 times and 54 times.

Kim Ji-san, a researcher at Kiwoom Securities, stated, "We are entering a cycle where both cathode materials and release films improve simultaneously, and we believe both businesses will secure a foundation for high growth through aggressive capacity expansion. Although we are a latecomer in the NCM sector, we are expanding our position by advancing up to the NCM8 series, and for release films, with the operation of the main customer's new domestic plant, sales of high value-added automotive films will expand," he forecasted.

First, although cathode active materials are a latecomer in the NCM sector, the product lineup is being advanced beyond the main NCM5 and NCM6 series to include the NCM8 series, and plans are in place to respond to customer demand through aggressive capacity expansion.

The production capacity for cathode active materials is expected to increase from the current annual 10,000 tons to 20,000 tons in the second half of this year, 30,000 tons next year, and 50,000 tons in 2023, with additional sales of over 200 billion KRW expected per 10,000 tons of production capacity. Based on this, sales of cathode active materials are projected to leap from 90 billion KRW last year to 230 billion KRW this year, 420 billion KRW next year, and 610 billion KRW in 2023. The NCM8 series is undergoing quality verification and the mass production timing is under negotiation, with supply expected to begin as early as the end of the year.

Release films for MLCC, which hold the global number one market share, are expected to benefit from favorable market conditions due to the MLCC industry's boom and the operation of the main customer's new plant. In particular, as the customer's new Tianjin plant begins full operation, sales of high value-added automotive films will expand, accompanied by profitability improvements.

The effect of capacity expansion will also support release films. The plan is to gradually increase production capacity from 43 million square meters per month this year to 55 million square meters next year and 70 million square meters in 2023. If the plan proceeds as expected, sales can grow annually by 20-30% for the time being.