[Click eStock] "Husung, 1Q Sales and Operating Profit Expected to Increase... Impact of High Growth in China's Electric Vehicle Market"

[Asia Economy Reporter Lee Jung-yoon] Eugene Investment & Securities maintained a buy rating and a target price of 30,000 KRW for Hwasung on the 11th, expecting an increase in sales and operating profit in the first quarter of this year.

Hwasung's sales and operating profit for the first quarter of this year are predicted to reach 144.8 billion KRW and 40.3 billion KRW, respectively. Sales are expected to increase by 129% year-on-year, and operating profit is estimated to turn from a loss to a profit. Researcher Han Byung-hwa of Eugene Investment & Securities explained, "The main reasons for the performance improvement are identified as the increased operating rate of the LiPF6 (lithium hexafluorophosphate) manufacturing plant in China due to the high growth of the Chinese electric vehicle market and the higher selling price," adding, "Although concerns have been raised about a decline in LiPF6 prices due to a drop in local spot prices in China, this is considered exaggerated."

He continued, "The delivery prices from leading companies are maintained at 40-50% lower than spot prices, so the decline in spot prices is not currently having a significant impact on delivery prices," and added, "Since the extension of subsidies makes it unlikely that the high growth trend of the Chinese electric vehicle market will slow down, it is also judged that the delivery prices of LiPF6 by companies are unlikely to drop sharply."

Furthermore, due to entry into the European market, Hwasung's growth rate is expected to rise again from the second half of 2024. Hwasung recently signed an agreement to build a secondary battery material production plant with a subsidiary of a global chemical company, and a production line will be established on the site purchased within the Katowice Special Economic Zone in Poland. Researcher Han said, "Construction of the final LiPF6 plant is expected to start within this year, and supply to customers will begin from the second half of 2024," adding, "Since the scale of the plant is expected to be larger than China's 3,800 tons, Hwasung's growth driven by Europe is expected to accelerate from 2024."