[Click eStock] "Seongil Hi-Tech, 3Q Also in Average Selling Price Decline Phase... Full-Scale Growth Expected Next Year"

On the 22nd, IBK Investment & Securities maintained a buy rating and a target price of 180,000 KRW for Seongil Hightech, stating that it is the only domestic recycling company with overseas factories and plans to expand pre-processing and post-processing plants in Europe and the United States, expecting growth centered on its overseas factories.

Seongil Hightech's sales in the second quarter of this year amounted to 63.5 billion KRW, and operating profit was 7.9 billion KRW, falling short of consensus estimates. Among the major metals in the second quarter, lithium sales decreased compared to the previous quarter, recording 7.4 billion KRW. Sales of lithium phosphate decreased in the second quarter, and lithium prices fell, which is estimated to have delayed lithium purchases by major customers. Nickel recorded 18.9 billion KRW, with a decrease in volume due to inventory accumulation by cathode material companies. As prices of major battery metals declined, the average selling price (ASP) of cobalt, nickel, and lithium in the second quarter fell by 12%.

Seongil Hightech's third-quarter sales are expected to be 71 billion KRW, with an operating profit of 7.9 billion KRW. It is anticipated that demand from customers who delayed purchases in the second quarter due to falling prices of key minerals such as lithium and nickel will resume in the third quarter.

Hyunwook Lee, a researcher at IBK Investment & Securities, said, "Following the metal price linkage, the ASP in the third quarter is expected to decline further after the second quarter. There is no additional production capacity (CAPA) this year, and profitability is expected to deteriorate due to spread contraction caused by falling metal prices. However, Seongil Hightech's full-scale growth is expected in 2024 when Phase 1 of Hydrocenter Plant 3 is completed."