[Click eStock] "KPS, the Most Undervalued Spent Battery Company"

Hana Securities analyzed on the 13th that KPS is the most undervalued waste battery company, and its performance will be reflected starting from April.

KPS completed the full payment for the acquisition of Segiritec, a waste battery company, in March and incorporated it as a 100% subsidiary. Segiritec mainly recycles lead-acid waste batteries into lead ingots and alloys and has secured non-ferrous metal smelting technology.

Kim Doohyun, a researcher at Hana Securities, explained, “Segiritec is a company equipped with high-level process facilities, technology, and sales networks, and it has obtained all the necessary permits to operate the waste battery business, so expansion into waste battery businesses beyond lead-acid batteries is expected. As of 2021, Segiritec’s sales amounted to 88.4 billion KRW.”

He continued, “Although Segiritec currently specializes in recycling lead-acid batteries, it is judged likely to expand into lithium battery recycling in the future. Segiritec possesses technology for the pre-processing stages of battery crushing and heat treatment, and the lithium battery pre- and post-processing technologies, which have not yet been secured, will be obtained through close collaboration with the Korea Institute of Geoscience and Mineral Resources and will be materialized within this year,” he forecasted.

Furthermore, he said, “The ongoing lead-acid battery business is expected to see sales growth due to the expansion of production capacity (CAPA) this year. The company’s CAPA, equipped with two rotary kilns, processes about 70,000 tons of lead-acid batteries annually, with sales of approximately 80 billion to 100 billion KRW. This year, CAPA will increase to 105,000 tons, and sales are expected to expand to around 120 billion to 150 billion KRW.”

As Segiritec will be reflected in KPS’s consolidated financial statements starting from the second quarter of this year, KPS’s operating profit is also expected to turn positive.

He analyzed, “Since Segiritec will be consolidated from the second quarter of this year, sales and operating profit for this year are expected to reach 89.1 billion KRW and 4.6 billion KRW, respectively, representing a 695.% increase and a successful turnaround to profitability. Full-scale growth is anticipated in 2024, with expectations for rapid sales expansion due to business entry following the acquisition of lithium battery recycling pre- and post-processing technologies, sales growth from Segiritec’s CAPA expansion, and prospects for orders of FMM equipment targeting the Greater China region.”