[Special Stock] Sama Aluminum, Exclusive Supplier of Domestic 2nd Battery Aluminum Pouch Film... Irreplaceable Material Company

[Asia Economy Reporter Hyungsoo Park] Sama Aluminum is showing strong performance. Securities firms' analysis that it is the most promising company in the secondary battery cathode foil core material sector appears to have influenced the stock price.

At 9:22 a.m. on the 19th, Sama Aluminum was trading at 28,500 KRW, up 6.34% from the previous day.

Hana Securities forecasted that Sama Aluminum's profitability would improve due to the global aluminum supply chain shortage phenomenon. They did not provide an investment opinion or target price.

Sama Aluminum is expanding its secondary battery aluminum foil production process by adding two more lines to the existing four lines in response to domestic battery manufacturers' production increase plans. After the expansion, the aluminum foil production capacity (CAPA) is expected to exceed approximately 40,000 tons annually. In May, it signed a supply contract worth about 210 billion KRW for secondary battery aluminum foil with ACC, the largest battery company in France. It also secured new aluminum foil supply customers including Volkswagen, a German automaker, and Northvolt, a Swedish battery manufacturer.

Choi Jae-ho, a researcher at Hana Securities, said, "Sama Aluminum was the first in Korea to develop electric vehicle aluminum foil with a thickness of 10?12㎛ (micrometers) that maintains high strength at thin thickness in 2009," adding, "With the expected continuous increase in aluminum foil demand centered on secondary batteries, line expansion in response to domestic and overseas customer requests will be inevitable."

He continued, "The proportion of secondary battery products in the rolling sector is expected to increase from about 40% before 2019 to over 70% this year," and analyzed, "It is projected to approach about 90% in 2024."

He added, "This means it should be regarded as a genuine secondary battery material company," and "Yulchon Chemical, which is transforming into a secondary battery material company, has a market capitalization approaching about 700 billion KRW."

Domestic packaging company Yulchon Chemical succeeded in domestic production of LIB aluminum pouch film, which was previously monopolized by Japanese companies. It signed a supply contract worth 1.5 trillion KRW with Ultium Cells, a joint venture between LG Energy Solution and GM. Aluminum pouch film is a core material that protects cathode and anode materials. Researcher Choi emphasized, "It is important to note that Sama Aluminum exclusively supplies the aluminum," explaining, "The domestic production of LIB pouch film means that Sama Aluminum's aluminum demand has surged."

The proportion of pouch-type batteries used in electric vehicles is expected to increase from 26% in 2021 to 36% in 2030. Sama Aluminum is expected to benefit structurally.

Researcher Choi emphasized, "Sama Aluminum's valuation is very undervalued with a price-to-earnings ratio (PER) of 15 times based on the expected 2023 earnings, and a PER of 11 times for 2024, when explosive earnings growth is expected due to the completion of expansion."

He said, "The shipment volume of aluminum products is increasing due to the growing demand for secondary battery batteries," adding, "The operating profit margin (OPM) of secondary battery aluminum foil is over 10%, and profitability is improving gradually as its proportion expands."