[Click eStock] "L&F, Tesla Effect in Second Half... Continued Earnings Growth"

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained a buy rating and a target price of 380,000 KRW for L&F on the 6th, stating that performance growth toward Tesla is expected to continue in the second half of this year.

L&F is projected to record strong results for the third quarter of this year, surpassing the market expectation of 88.1 billion KRW in operating profit by 6.6%. Some of the performance was deferred to the third quarter due to semi-annual inventory adjustments by major clients in June.

In the third quarter, demand for NCMA (Nickel-Cobalt-Manganese-Aluminum) cathode materials for Tesla, the largest client, continued to increase, with shipments estimated to have risen by 38% compared to the previous quarter. The sales proportion to Tesla is also expected to expand to 70% on a quarterly basis. The unit price is estimated to have increased by 15% compared to the previous quarter due to the exchange rate effect, while the operating profit margin (OPM) is analyzed to slightly decrease to 6.9% due to the relative price increase.

For the fourth quarter of this year, L&F's sales are forecasted to increase by 12% from the previous quarter to 1.5 trillion KRW, and operating profit is expected to rise by 14% to 106.6 billion KRW. Tesla electric vehicle sales in Shanghai, China, are anticipated to continue increasing from 189,000 units in the third quarter to 248,000 units in the fourth quarter. Shipments of NCMA cathode materials through LG Energy Solution are also expected to continue increasing in the second half of the year.

Additionally, Daishin Securities researcher Jeon Chang-hyun explained, "The recent government decision to deny approval for the construction of a cathode material factory in the U.S. is a temporary issue, and a re-examination and approval are planned after addressing the deficiencies." He added, "There are various possibilities such as strengthening dominance in the North American business and entering independently." He further noted, "Although some schedule delays compared to the original plan are inevitable, the direction of investment in North America will be maintained."