[EcoPro Analysis] ② Rapid Growth from 100 Million Capital Company to Large Corporate Group

Chairman Dong-chae Lee, Founder of Korea Zeoleum in 1998
Strengthening Competitiveness through Research & Development (R&D) and Vertical Integration
Stock Market Advises Caution: "Corporate Value Overestimated, Be Careful with Investments"

Starting with a capital of 100 million KRW in 1998, the EcoPro Group has surpassed the total assets threshold of 50 trillion KRW, which is the criterion for large business groups classified by the Fair Trade Commission. It is scheduled to be included in the large business group category on May 1.

EcoPro Trio Dominates KOSDAQ... Foreign Investors Sell Intensively

The EcoPro Group, which consists of a holding company EcoPro, two listed companies, and 21 unlisted companies totaling 24 companies, has dominated the KOSDAQ market this year. The stock prices of the so-called ‘EcoPro Trio’?EcoPro BM, the leading company in secondary batteries, EcoPro, and EcoPro HN?soared to unprecedented heights. As of the 16th, when EcoPro BM and EcoPro hit new highs, the market capitalization of EcoPro Group stocks exceeded 33 trillion KRW. This is an increase of more than 21 trillion KRW since the end of last year’s 12.2982 trillion KRW. It surpassed Naver’s market capitalization (around 32 trillion KRW) and is approaching Hyundai Motor’s (37.3565 trillion KRW), which ranks 7th in KOSPI market capitalization.

With EcoPro Group’s stock prices rising so rapidly, they have even exceeded the target prices set by securities firms, causing some analysts to temporarily suspend their stock price analysis. While investors are cheering, the securities industry advises caution, stating that the valuation (corporate value) has become excessively high.

According to the Korea Exchange on the 20th, EcoPro Group stocks showed a sharp decline on the 17th. EcoPro closed at 399,500 KRW, down 8.79% from the previous trading day. EcoPro BM and EcoPro HN also closed down 7.41% and 4.11%, respectively. Notably, foreign investors net sold 239.9 billion KRW of EcoPro and 161.1 billion KRW of EcoPro BM over two days from the 16th to the 17th, ranking first and second in foreign net selling during this period. A financial investment industry insider said, "The appropriate target price for EcoPro BM suggested by domestic securities firms is around 200,000 KRW," adding, "It is currently difficult for analysts covering EcoPro BM to propose a new target price at this level." Another insider explained, "Since the stock price has risen without significant correction this year, a period of adjustment is necessary," and added, "Whether there will be further rises depends on whether institutional investors who have been realizing profits this year show meaningful buying trends."

Chairman Lee Dong-chae Holds 19.45% Stake in Holding Company EcoPro

Lee Dong-chae, chairman of the EcoPro Group, established Korea Zeoleum in 1998 with a capital of 100 million KRW. At the time of founding, the company developed materials and components for air pollution prevention. In 2001, the company changed its name to EcoPro and began domestic production of secondary battery materials in 2003. In October 2004, it participated in a consortium for 'Next-generation high-capacity secondary battery development' with Samsung SDI and Cheil Industries, successfully mass-producing nickel-based multi-component precursor materials that could replace existing cobalt-based materials. Since 2006, it has produced nickel-based cathode active material precursors and supplied them to Cheil Industries for secondary batteries used in power tools. In April 2007, it acquired cathode active material production facilities and business rights from Cheil Industries, establishing a system capable of mass-producing core secondary battery materials.

In July 2007, the company raised 9.9 billion KRW through an initial public offering (IPO) and invested in expanding cathode active material production facilities. Production capacity was increased from about 5 tons per month to 20 tons per month. In its first year as a listed company, EcoPro recorded sales of 26.5 billion KRW and operating profit of 4.7 billion KRW. As of the end of the third quarter last year, Chairman Lee holds a 19.45% stake in EcoPro. Including related parties such as his younger brother Lee Seon-yi, his son Seunghwan, and daughter Yeonsu, as well as the management consulting firm Irum TNC, the total stake amounts to 27.0%.

In May 2016, Chairman Lee spun off EcoPro BM from EcoPro to specialize in the cathode material business. In May 2021, EcoPro HN was spun off to specialize in the air environment business, completing the current holding company structure. EcoPro holds 45.6% of EcoPro BM and 31.4% of EcoPro HN. The EcoPro Group has established a business model spanning from precursors to battery recycling.

EcoPro BM, which has grown into a leading affiliate, succeeded in establishing a mass production system for high-nickel cathode materials. Based on original technology development and over 16 years of accumulated coating technology, it leads the domestic and global high-capacity cathode material market. Cathode materials are key components that determine battery voltage, capacity, and lifespan.

EcoPro BM is rapidly growing as demand for lithium-ion secondary batteries increases in electric vehicles (EV), energy storage systems (ESS), uninterruptible power supplies (UPS), smart grids, aerospace, medical, and military applications. Last year, it recorded sales of 5.3569 trillion KRW, operating profit of 382.5 billion KRW, and net profit of 269 billion KRW. Compared to the previous year, sales and operating profit increased by 261% and 233%, respectively, while net profit rose by 175%.

EcoPro HN is a comprehensive environmental company providing eco-friendly solutions. It operates a 'chemical filter business' that removes harmful gases and an 'air pollutant reduction business' that eliminates volatile organic compounds (VOCs), one of the causes of fine dust. It is steadily expanding its eco-friendly business areas, including a 'greenhouse gas reduction business' that treats perfluorinated compounds (PFCs) generated in semiconductor processes and a 'water treatment system business' that handles wastewater and purified water.

From Cathode Material to Secondary Battery Recycling

Scheduled to be included in the large business group category on May 1, the EcoPro Group has completed vertical integration from precursor production, a cathode material, to secondary battery resource recycling. In the Yeongilman 1 General Industrial Complex in Pohang, ▲EcoPro CNG (recycling), ▲EcoPro AP (high-purity oxygen and nitrogen), ▲EcoPro Innovation (lithium compounds), ▲EcoPro Materials (precursors), and ▲EcoPro EM (high-nickel cathode materials) have established or are operating factories.

EcoPro Materials and EcoPro EM are also growing into key affiliates within the group. While EcoPro Materials has grown as a precursor producer, EcoPro EM has established a mass production system for high-nickel cathode materials, specifically NCA products. EcoPro EM, a joint venture between EcoPro BM and Samsung SDI, completed investment in a CAM6 cathode material plant with an annual capacity of 36,000 tons in October 2021 and is currently producing high-nickel NCA cathode materials.

The EcoPro Group has set an annual sales target of 30 trillion KRW by 2027, encompassing all affiliates including battery materials and eco-friendly businesses. The core affiliate EcoPro BM plans to build the capacity to produce 710,000 tons of cathode materials by 2027. It aims to become the world’s number one cathode material company with annual sales exceeding 27 trillion KRW. The group will expand the scope of recycled raw materials from used batteries, continue R&D investments including the development of solid electrolyte materials, and establish local production capacity for precursors and cathode materials in North America to increase market share.