[Click eStock] "Cheonbo, 1Q Earnings Expected to Decline... Improvement from Second Half"

Daishin Securities maintained a buy rating and a target price of 300,000 KRW for Cheonbo on the 14th, stating that poor performance is expected in the first quarter of this year as well.

In the fourth quarter of last year, Cheonbo recorded disappointing results, with sales of 84.2 billion KRW, down 5% year-on-year, and operating profit of 11.1 billion KRW, down 44%, falling short of consensus estimates.

In the electrolyte segment, a secondary battery material, sales volume in December was sluggish due to inventory adjustments by major customers, resulting in sales remaining at a similar level to the previous quarter at 64.1 billion KRW. Profitability declined as one-time expenses such as annual leave allowances and year-end bonuses were incurred, leading to a decrease in operating profit. In the electronic materials segment, including display and semiconductor sectors, operating profit decreased due to continued sluggishness in the display market and increased fixed costs.

Cheonbo's sales in the first quarter of this year are expected to decline 16% from the previous quarter to 70.8 billion KRW, and operating profit is projected to increase 8% to 11.9 billion KRW, continuing a trend of disappointing performance below market expectations. Changhyun Jeon, a researcher at Daishin Securities, explained, "In the secondary battery materials segment, a price decline linked to recent drops in lithium and lithium salt (LiPF6) electrolyte prices and a decrease in shipments due to slowing demand for Chinese EVs are expected." He added, "The electronic materials segment is also expected to continue experiencing demand weakness due to the sluggish LCD market."

He further stated, "From the second half of the year, performance improvement is expected to accelerate with the operation of new capacity in the secondary battery materials segment," and "With the start of new capacity for electrolytes and additives in the third and fourth quarters of this year, the company is expected to enter a full growth phase." Additionally, he noted, "Due to the effect of increased shipments offsetting price declines, sales of secondary battery materials are expected to increase by 66%, from 115.9 billion KRW in the first half of the year to 192.4 billion KRW in the second half."