[New Market Cap Rankings] ③ Excited 2nd Battery... Also Taking Over KOSDAQ

Editor's NoteDomestic stock markets have continued to underperform this year. As central banks around the world have rushed to raise benchmark interest rates to combat inflation, funds have been flowing out of the stock market. The KOSPI, which was above 3,300 points in July last year, has fallen to the 2,300 level. It has dropped nearly 1,000 points over the past 16 months. Coupled with the semiconductor industry downturn, Samsung Electronics, the bellwether of the domestic stock market, has also struggled. The U.S. Federal Reserve (Fed) projected after the November Federal Open Market Committee (FOMC) meeting that the final peak of the benchmark interest rate would be higher than previously expected. The stock market, which had been rising based on asset liquidity until last year, is likely to continue to show weakness next year.

It is difficult to predict the future without examining the current changes. Asia Economy conducted a comprehensive survey of changes in market capitalization of corporate groups with market caps exceeding 1 trillion won in the domestic stock market. As of the closing price on July 6 last year, when the KOSPI hit an all-time high, there were 219 corporate groups with market caps over 1 trillion won, but this number decreased to 164 as of last month’s 31st. We review the changes in rankings of top market cap corporate groups and the details of market cap increases and decreases.

[Asia Economy Reporter Lee Myunghwan] The secondary battery boom has also changed the face of KOSDAQ. In recent years, bio-related stocks had held the top spot on KOSDAQ, but secondary battery material companies, riding the growth of electric vehicles, are now dominating the top market capitalization rankings on KOSDAQ.

On the 4th, Asia Economy compared the market capitalization rankings of corporate groups with market caps over 1 trillion won as of July 6 last year, when the KOSPI peaked, and as of last month’s 31st. The market cap of the Ecopro corporate group more than doubled from 6.2047 trillion won to 15.6055 trillion won. During this period, the corporate group’s market cap ranking jumped from 44th last year to 16th. The Ecopro Group consists of three companies all listed on KOSDAQ: Ecopro BM, which manufactures cathode active materials and precursors for secondary batteries used in electric vehicle batteries; Ecopro HN, which provides greenhouse gas reduction solutions; and the holding company Ecopro.

Most of the large corporate groups listed on KOSPI ranked at the top, but this is the first time that corporate groups composed of KOSDAQ-listed companies have appeared among the top market cap rankings. Saeronix Group also saw its market cap surge nearly fourfold from 2.6307 trillion won last year to 8.3202 trillion won, climbing 65 places in the corporate group market cap rankings. Saeronix, which manufactures TV components, has L&F as an affiliate.

The reason Ecopro Group and Saeronix Group have been valued higher than Korea’s representative large corporate groups is thanks to the ‘secondary battery’ theme that has struck the domestic stock market this year. Secondary batteries are one of the so-called ‘Taejo-Ibangwon (Solar Power, Shipbuilding, Secondary Battery, Defense, Nuclear Power)’ sectors that have emerged as leading themes this year, with investment demand rising sharply.

In particular, Ecopro BM showed a sharp rise from the second half of last year and became the top KOSDAQ stock for the first time this year. This is the first change in the top KOSDAQ stock in four years. Since Celltrion moved to KOSPI in February 2018, Celltrion Healthcare had held the top KOSDAQ spot, but this year it has been fiercely competing with Ecopro BM for the number one market cap position on KOSDAQ. Riding Ecopro BM’s rapid growth, Ecopro also quickly increased its corporate value this year and entered the top 10 in KOSDAQ market cap rankings in August. L&F, which settled in third place in KOSDAQ market cap this year, showed a similar trend. Its corporate value was only 2.5046 trillion won in July last year but surged to 8.0841 trillion won. As of last month’s 31st, four secondary battery-related stocks are in the top 10 KOSDAQ market cap rankings: Ecopro BM (1st), Ecopro (5th), L&F (3rd), and Chunbo (9th). Last July, Ecopro BM was the only one.

Secondary batteries are no longer just a theme. They have recently demonstrated growth potential by announcing remarkable earnings. Ecopro Group achieved its highest-ever performance this year, with third-quarter sales and operating profit exceeding 1.6 trillion won and 200 billion won, respectively. Ecopro recorded an operating profit of 211.4 billion won on a consolidated basis in the third quarter, a 358% increase compared to a year earlier.

The growth trend of the electric vehicle market is expected to continue for the time being. Jaeyoon Han, a researcher at Cape Investment & Securities, said, "Due to the structural growth of the electric vehicle market, the secondary battery market will also grow structurally. From 2023, growth is expected in the U.S. market, where the battery capacity per electric vehicle is large, which could bring forward the supply shortage point to before 2030." He added, "It is a situation where we can expect policy benefits for the domestic secondary battery value chain, which is proactively responding by building factories in the U.S. and elsewhere."