[Click eStock] "L&F, the supply contract with Tesla is just the beginning"

[Asia Economy Reporter Kwon Jaehee] DB Financial Investment maintained a 'Buy' rating on L&F on the 2nd and set a target price of 360,000 KRW.

Recently, L&F signed a cathode material supply contract worth 3.8 trillion KRW with Tesla. Through this contract, from January 2024 to December 2025, L&F plans to supply high-nickel NCMA cathode materials to Tesla, the leading electric vehicle company. Applying the export price of $44 per kg from Daegu cathode materials in January this year, the scale is approximately 66,000 tons. According to L&F, this volume is intended to support Tesla's initial battery production capacity, and they will supply products with a higher nickel content than the existing NCMA cathode materials sold.

L&F is expected to meet the Tesla cathode material demand through the currently expanding Guji Plant 3 and some of its existing facilities. This volume is estimated to be used in the 4680 batteries produced at Tesla's Nevada factory. Considering L&F's annual cathode material supply volume, the annual supply volume of 33,000 tons under this contract is not large, but it is noteworthy that L&F has been selected as a major cathode material supplier for Tesla.

Jung Jaeheon, a researcher at DB Financial Investment, said, "Despite the overall stock price rally in the secondary battery sector recently, L&F's price-to-earnings ratio (PER) is at about 17.1 times, which is significantly undervalued compared to competitors," adding, "Being a major cathode material supplier to Tesla, the world's number one electric vehicle company, is a sufficient premium factor, so we rate it as 'Buy' and consider it the 'Top Pick' in the sector."