[Click eStock] Daejoo Electronic Materials, Earnings Soar... Target Price Up 16% to 140,000 Won

[Asia Economy Reporter Lee Seon-ae] NH Investment & Securities announced on the 20th that it maintains a buy rating on Daejoo Electronic Materials and raises the target price from 140,000 KRW to 160,000 KRW.

Joo Min-woo, a researcher at NH Investment & Securities, explained, "We have advanced the assumed production capacity of silicon oxide (SiOx) from 10,000 tons by the end of 2025 to 10,000 tons by the end of 2024, reflecting a 7% and 8% upward revision in the 2024 revenue and operating profit estimates, respectively."

The target multiple was set at 26 times, applying a 30% discount to the four-year average of POSCO Chemical, which has a similar revenue structure. POSCO Chemical is a comprehensive secondary battery materials company preparing to enter upstream sectors such as lithium and precursors, in addition to cathode and anode materials, so a certain discount was deemed necessary.

Recently, production plans of battery companies, including those for electric vehicles, have been revised upward, and Daejoo Electronic Materials' SiOx production capacity is also expected to be advanced from 10,000 tons in 2025 to 10,000 tons by the end of 2024. Accordingly, the 2024 operating profit forecast has been revised upward by about 8%.

Additionally, there is a possibility of expanded battery investment by Ultium Cells (LG Energy Solution-GM JV), which is expected to benefit Daejoo Electronic Materials as a supplier of SiOx. Besides the confirmed Ultium Cells plants 1 and 2, a third plant (estimated 40GWh) is likely to be added, and supply to Honda (40GWh) is also under discussion. If finalized, Daejoo Electronic Materials' SiOx production capacity (20,000 tons by the end of 2026) is likely to be revised upward after 2025.