[MarketING] 2nd Battery Stocks Racing Ahead Riding on Tesla

KOSPI Closes Higher After 3 Days
Secondary Battery Stocks Rise on Tesla Optimism
Focus on Tesla's 'Investor Day' Announcements on the 1st

[Image source=Yonhap News]

The KOSPI closed higher after three trading days. Secondary battery stocks, which led the rebound in January, continue to show remarkable strength even during the February correction. Expectations for Tesla are driving the stock prices of domestic secondary battery companies upward.

KOSPI closes higher after 3 days... gains narrow

On the 28th, the KOSPI closed at 2,412.85, up 10.21 points (0.42%) from the previous day. The KOSDAQ ended the session at 791.60, rising 11.3 points (1.45%). The KOSDAQ recovered above the 790 level for the first time in five days.

Although the KOSPI showed gains of over 1% in early trading, the increase narrowed as foreign investors turned to selling. Foreigners sold 288.6 billion KRW in the securities market that day. This marks the first time this year that foreign investors have sold for three consecutive days in the securities market. Individual investors also net sold 141.1 billion KRW. Institutions alone net bought 408.1 billion KRW, lifting the index.

Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "In the afternoon, foreign investors turned to selling in the KOSPI, and the won-dollar exchange rate, which had started the day down more than 5 won, returned to the 1,320 won level during the session, narrowing some of the index's gains. The secondary battery sector's upward momentum continued due to the anticipation of Tesla's upcoming 'Investor Day' and the news of a 3.8 trillion KRW supply contract for cathode materials between L&F and Tesla."

On the day, LG Energy Solution rose 2.95%, and Samsung SDI increased by 2.65%. L&F surged 8.94% on the Tesla supply contract announcement. It maintained its strong performance for the third consecutive day, reaching an intraday high of 285,000 KRW, marking a 52-week high.

L&F disclosed that it signed a high-nickel cathode material supply contract worth 3.8347 trillion KRW (approximately 2.9 billion USD) with Tesla. This supply volume is about four times L&F's last year's sales of 970.8 billion KRW. The product supply period under this contract is two years, from early next year until the end of 2025. Kim Jeong-hwan, a researcher at Korea Investment & Securities, said, "L&F's cathode material shipments are expected to increase by 46% year-on-year to 110,000 tons this year. Reflecting this, we are raising our operating profit estimate for this year by 11% to 362.5 billion KRW and increasing the target stock price by 15% to 380,000 KRW." He added, "This is a time to focus on momentum such as L&F's relatively stable profits amid falling lithium prices, securing new customers, and confirmed North American cathode material investments following the finalization of the U.S. Inflation Reduction Act (IRA) details in March."

Focus on Tesla's 'Investor Day' announcements

As Tesla's Investor Day approaches, market attention is focused on what plans Tesla will unveil. At the Investor Day event scheduled for the 1st of next month, Tesla is expected to reveal its long-term growth plan, 'Master Plan 3.'

In the securities industry, it is anticipated that Elon Musk, Tesla's CEO, will disclose plans for factory expansions and capital investments through Master Plan 3, with particular attention on whether he will specify plans for a half-price electric vehicle.

Seo Sang-young, a researcher at Mirae Asset Securities, explained, "Tesla is expected to announce its long-term growth plan at this Investor Day. Recently, Musk mentioned producing 20 million vehicles annually by 2030. Given that Tesla delivered 1.31 million vehicles last year, achieving this goal would require a total of 12 gigafactories. The market expects announcements regarding the establishment of the fifth factory in Mexico and expansion plans including Indonesia."

Depending on Tesla's announcements, the strong performance of secondary battery stocks may continue. Researcher Seo said, "For mass sales to proceed, an affordable vehicle priced around 30,000 USD is ultimately necessary, and the inclusion of this target and launch timing will be the core of this event. Although Tesla may not disclose related details, investment firms believe that if such information is revealed, stock prices will rise further." Fueled by these expectations, Tesla's stock rose more than 5% the previous day.