[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 16th a buy rating for Iljin Materials and raised the target price to 137,000 KRW.
Kim Hyun-soo, a researcher at Hana Financial Investment, stated, "Based on a production capacity of 100,000 tons in 2024, the expected standalone sales are 1.5 trillion KRW and consolidated sales are 1.7 trillion KRW. The expected operating profit is approximately 260 billion KRW, and assuming an effective tax rate of 22% and future impairment of control over the Malaysian subsidiary, the estimated net profit attributable to controlling interests in 2024 is 150 billion KRW." He added, "We raised the target price by applying a target price-to-earnings ratio (PER) of 40 times, reflecting the average EPS growth rate of 40% for secondary battery material companies in 2024."
Considering that Samsung SDI and LG Energy Solution mentioned that due to a shortage of automotive semiconductors, sales in the electric vehicle battery sector for the fourth quarter are expected to be similar to the previous quarter or possibly decline, it is judged that sales in the battery foil segment of Iljin Materials in the fourth quarter will also face growth difficulties. However, under carbon emission regulations, as OEMs prioritize limited semiconductor supplies for electric vehicles, sales in the battery foil segment are expected to continue growing in 2022.
Meanwhile, although there is no additional guidance beyond the current 60,000 tons production capacity in 2022, considering that Iljin Materials is the market leader and has the most sound financial structure among copper foil companies with a debt ratio below 30%, it is expected that additional capacity expansion will accelerate.
Accordingly, the annual copper foil production capacity is expected to increase to 80,000 tons in 2023 and over 100,000 tons in 2024. Consequently, annual sales are projected to grow sharply to 1 trillion KRW in 2022 (YoY +45%), 1.4 trillion KRW in 2023 (YoY +33%), and annual operating profit to 132.4 billion KRW in 2022 (YoY +61%) and 193.6 billion KRW in 2023 (YoY +46%).
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