[Click eStock] Ecopro BM to Announce Overseas Factory Establishment... Target Price Raised

[Asia Economy Reporter Lee Seon-ae] Ebest Investment & Securities announced on the 13th that it maintains a 'Buy' rating on Ecopro BM and raises the target price to 528,000 KRW. This is based on applying the upper-end price-to-earnings ratio (PER Multiple) of domestic secondary battery cathode material companies as of 2022.

Researcher Lee Anna of Ebest Investment & Securities explained, "Ecopro BM has the highest operating profit margin among domestic cathode material companies, and it is expected that the profit margin will gradually increase through vertical integration in the future. Additionally, based on its advanced cathode material technology, large-scale orders centered on SK Innovation and Samsung SDI are continuing, so applying the upper-end PER Multiple is considered valid."

Ecopro BM will adopt a vertical integration model including precursors and recycling when establishing local overseas factories through Ecopro Global. Currently, Ecopro CNG has already started dry recycling as planned, and wet recycling will begin within the fourth quarter. Furthermore, Ecopro Innovation will start lithium hydroxide processing in the second half of this year or early 2022.

The researcher emphasized, "When the scale of local investment in the U.S. is specified in the existing expansion plan, the scale will increase by at least 30,000 tons annually. Also, as the expansion scale increases, the value will rise due to upward revisions in earnings estimates. Accordingly, the stock price upside will further expand."

Meanwhile, Ecopro BM raised its expansion plan to 210,000 tons in 2024 and 290,000 tons in 2025 during the Q2 earnings announcement. This only includes the additional investment plan for the European factory. On the 9th, it announced orders worth over 10 trillion KRW for SK Innovation over three years from 2024 to 2026. SK Innovation plans to secure 90 GWh of production capacity in the U.S. by 2025. Considering this, the required cathode material volume for SK Innovation in the U.S. alone by 2025 is about 120,000 tons. Therefore, even if Ecopro BM supplies some from domestic factories, at least 30,000 tons of production capacity in the U.S. will be needed by 2025. Starting from 30,000 tons, additional expansions are expected annually.

The researcher predicted, "Ecopro BM is expected to announce the establishment of overseas factories around mid-October, which is likely to serve as another momentum for stock price increases following the order announcements."