[Click eStock] "Cheonbo, 3Q Earnings Growth... Buy Strategy if Stock Price Drops"

[Asia Economy Reporter Ji Yeon-jin] Hana Securities maintained a buy rating and a target price of 380,000 KRW for Cheonbo, stating that although there is a possibility of a stock price decline due to downward revisions in this year's earnings estimates, steep earnings growth is expected with the start-up of new facilities in the first half of next year.

On the day, Hana Securities lowered Cheonbo's sales forecast for this year by 13%, from 370.6 billion KRW to 322.2 billion KRW.

Cheonbo recorded sales of 65.8 billion KRW in the second quarter, a 9% increase year-on-year, and operating profit of 12 billion KRW, a 25% increase, but these figures fell short of market expectations. The secondary battery materials segment (accounting for 56% of sales) showed weakness with sales down 44% quarter-on-quarter to 36.8 billion KRW and operating profit down 41% to 7.2 billion KRW. This was due to the suspension of electric vehicle production lines caused by China's lockdown measures, which significantly reduced demand for lithium salts and additives, as well as a decline in the price of the raw material 'LiPF6' for the main product P electrolyte (which accounts for 58% of the segment's sales).

The semiconductor and display materials segment (accounting for 31% of sales) saw sales increase 23% year-on-year due to high selling prices, but sales decreased 10% quarter-on-quarter due to weakening demand for end products. This marked the first quarterly decline since Q4 2020.

Sales in the third quarter of this year are expected to increase 22% quarter-on-quarter to 80.5 billion KRW, with operating profit rising 26% to 15.2 billion KRW during the same period. Researcher Kim Hyun-soo of Hana Securities said, "China's retail sales of electric vehicles in July reached 490,000 units, a 119% increase year-on-year, showing a clear upward trend," adding, "the price of LiPF6, which is linked to selling prices, rose 10% at the end of July compared to the end of June, showing signs of recovery, so earnings growth is possible in the third quarter."