[MarketING] 2nd Battery Stocks Soar Amid Consecutive Positive Factors

Secondary Battery Stocks Continue to Rise Amid Consecutive Positive Factors
Demand and Other Uncertainties Remain

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] Secondary battery stocks continue their upward march, buoyed by ongoing positive developments. Although concerns about demand and other uncertainties have been raised, news of companies expanding their investments appears to be mitigating these worries.

Stock Prices Driven by Continued Positive News Such as Factory Establishments

On the 11th, secondary battery stocks showed strong gains across the board. Samsung SDI rose 1.96% compared to the previous day, maintaining a four-day consecutive upward trend. LG Energy Solution saw a slight increase but also continued its four-day rise. Over the four days, LG Energy Solution rose 9.46%, and Samsung SDI increased by 7.03% respectively.

On the KOSDAQ, secondary battery-related stocks also stood out with strong performance. EcoPro rose 6.78%, and EcoPro BM closed up 3.52%. L&F ended the day up 2.09%, and Cheonbo increased by 1.05%.

Recently, positive news such as factory establishments has been continuously emerging, pushing stock prices higher. According to media reports from the previous day, Samsung SDI is reportedly considering building a third factory near its first and second plants in Hungary. The investment scale for the third factory is expected to exceed 1 trillion won, and it is likely to be a joint venture producing batteries exclusively for BMW. Kim Jisan, a researcher at Kiwoom Securities, said, "BMW plans to start producing electric vehicles based on its first dedicated EV platform, 'Neue Klasse (New Class),' from 2025," adding, "Samsung SDI is preparing for mass production of various sizes of 46mm cylindrical cells, and considering the strategic partnership with BMW, it is highly likely to supply the Neue Klasse lineup." Kim also noted, "There are discussions about establishing joint ventures with GM and Volvo in North America, and aggressive moves under the Inflation Reduction Act (IRA) environment are expected to drive high growth."

Alongside this, Tesla is reportedly planning to invest about 1 trillion won to expand its Austin, Texas factory. According to foreign media such as CNBC and The Wall Street Journal (WSJ), Tesla is pushing forward with expanding its Austin plant to manufacture and test electric vehicle batteries.

The previous day, news that LG Energy Solution would partner with Ford to build an electric vehicle battery factory in Turkey positively influenced secondary battery stock prices.

Additionally, strong earnings reports have supported the momentum. The EcoPro Group announced that its total exports last year surpassed $1.6 billion (approximately 1.9856 trillion won), achieving the highest export volume in its history. This export performance was reflected in stock prices due to expectations of earnings growth. Kim Seokhwan, a researcher at Mirae Asset Securities, said, "The KOSDAQ recovered to the 700 level, driven by strength in secondary batteries and software sectors," adding, "The news of EcoPro Group's record export achievement boosted expectations for earnings growth, leading the sector's rise."

Concerns Over Demand and Other Uncertainties Remain

Despite the ongoing positive developments and strong stock performance, uncertainties related to the secondary battery industry persist. Samsung Securities downgraded its investment opinion on the secondary battery industry from 'Overweight' to 'Neutral' on the same day. Jang Jeonghoon, a researcher at Samsung Securities, explained, "The investment environment factors we considered two months ago have become less favorable," adding, "Therefore, considering the risk of underperforming the market in the short term, a downgrade in investment opinion was unavoidable."

Samsung Securities cited selling prices, demand, and the IRA as sources of concern. Regarding selling prices, lithium prices, which had surged 1000% over two years until November last year, fell 16% in December. Researcher Jang analyzed, "If the downward trend continues this year, unlike last year, companies will respond more conservatively to lithium purchases in the short term," adding, "Korean cathode material and cell companies, which operate under cost pass-through mechanisms, may face earnings pressure at certain times, and stock prices are likely to reflect this in advance."

On demand concerns, Jang said, "With European automakers having accumulated some battery inventory, if signals of weak electric vehicle sales appear, they will inevitably reduce battery purchases in the short term, making it difficult to be free from demand risk."