[Click eStock] "Iljin Materials, Battery Foil Sales Expected to Accelerate"

Korea Investment & Securities Report
Target Price Raised by 25%

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating on Iljin Materials on the 28th and raised the target price by 25% to 125,000 KRW. This is analyzed to reflect the clear profit growth trend due to the full-scale operation of the expanded battery copper foil line.

Samsung SDI, a key customer of Iljin Materials, has started mass production of Gen5 batteries for BMW and cylindrical batteries for Rivian. From the third quarter, sales of battery copper foil from Iljin Materials' Malaysia plant are expected to accelerate. Jeonghwan Kim, a researcher at Korea Investment & Securities, said, “Although the normalization of the Malaysia subsidiary has been delayed, leading to a downward revision of operating profit forecasts for this year and next year by 11% and 6% respectively compared to early-year estimates, the strong electric vehicle market has increased profit visibility, and factors causing undervaluation compared to other groups have been resolved, so a rebound is expected.”

There is no change in the tight copper foil supply and demand outlook for the second half of the year, which was expected from the beginning of the year. This is because global demand forecasts for secondary batteries for electric vehicles have been continuously revised upward since early this year, and the rise in copper foil prices and the signing of supply contracts for 5-micron high-quality copper foil are showing tight supply and demand. In the case of Iljin Materials' domestic line, even considering price increases, copper foil export volume has steadily increased since early this year without expansion, maximizing the operating rate.

Researcher Kim said, “Top-tier battery copper foil companies have been steadily advancing their expansion plans since early this year in anticipation of a shortage in copper foil production,” adding, “This means that the existing expansion plans of major copper foil companies are insufficient to meet supply, and it will be difficult to resolve the supply shortage in the short term.”

Operating profit this year is expected to increase by 75% year-on-year to 89.1 billion KRW. This is because sales at the Malaysia plant are expected to double compared to the previous year due to low electricity costs, labor costs, and subsidies, resulting in an operating profit margin increase of 2.8 percentage points compared to one year ago.