[Click eStock] "Cosmo Chemical, Corporate Value Rises with Used Battery Recycling"

[Asia Economy Reporter Lee Jung-yoon] Hana Securities initiated coverage on Cosmo Chemical on the 2nd with a buy rating and a target price of 29,000 KRW. As recycling of spent batteries establishes itself as a core business, it is expected to play a role in elevating the company's value to the next level.

Cosmo Chemical plans to establish a total spent battery recycling production capacity of 7,000 tons by 2024, consisting of 4,000 tons of nickel, 2,000 tons of cobalt, and 1,000 tons of lithium. Although the selling price may fluctuate linked to the London Metal Exchange (LME) prices, based on recent prices, sales of approximately 300 billion KRW are expected.

Once the precursor investment by its subsidiary Cosmo Advanced Materials is completed, profitability maximization is anticipated through vertical integration within the group, encompassing spent battery recycling, precursor, and cathode material production. Given that sales can exceed about twice the current separate sales based on production volume, if spent battery recycling becomes the main business in the future, the corporate value is expected to rise to the next level.

Cosmo Chemical's consolidated sales for 2024 are forecasted to increase by 54.7% year-on-year to 1.5744 trillion KRW, with operating profit rising 61.4% to 138.8 billion KRW. On a separate basis, sales are analyzed to increase 44.4% to 463.4 billion KRW, and operating profit to grow 77% to 40.8 billion KRW.

Researcher Kim Gyu-sang of Hana Securities explained, "With spent battery recycling emerging as a core business, rapid sales growth is expected through vertical integration and synergy within the group. Additionally, profitability improvement is anticipated in the existing titanium dioxide business through an increased proportion of special-purpose anatase type products."