Eco&Dream, Precursor Company, Stock Price Up 280%
Concerns Over Secondary Battery Growth Slowdown Due to Electric Vehicle Sales Slump
Announced Large-Scale Facility Investment Plan Early This Year... Growth Expectations Spread
Result of Sharp Stock Price Rise and Concentration Phenomenon
Eco&Dream, a producer of cathode active material precursors, one of the secondary battery materials, has rapidly inflated its market capitalization this year. This contrasts with the generally sluggish stock prices of secondary battery-related companies in the domestic stock market. Despite forecasts that the growth rate of the secondary battery market will slow due to weak electric vehicle sales, the company decided to make large-scale facility investments, attracting individual investors.
According to the financial investment industry on the 6th, Eco&Dream's stock price has risen 276.6% since the beginning of this year. It closed at 22,200 KRW at the end of last year and jumped to 83,600 KRW in just over two months. The market capitalization exceeded 970 billion KRW. The foreign ownership ratio dropped from 2.2% to 0.1%, and institutional investors recorded a net sale of 710,000 shares.
Eco&Dream started its catalyst material and emission reduction device business in 2005 based on proprietary technology. It began mass-producing NCM (Nickel-Cobalt-Manganese) cathode active material precursors in 2014, marking its leap as a secondary battery material company. Last year, it recorded sales of 51.5 billion KRW and an operating loss of 3 billion KRW. Compared to the previous year, sales decreased by 15%, and operating profit turned to a loss.
On January 11, Eco&Dream signed a five-year contract to supply high-nickel NCM precursors to a secondary battery material customer. The annual precursor production capacity of its first plant in Cheongju, Chungbuk, is 5,000 tons, and to meet increasing demand, it plans to establish additional production facilities in Gunsan, Jeonbuk. Individual investors expecting improved future performance appear to be buying Eco&Dream shares.
In June last year, the company secured a 45,000-pyeong (approximately 148,760 square meters) site in Saemangeum. At the time of securing the site, it was expected to build facilities capable of producing 25,000 tons of precursors annually. Last month, the expansion investment scale was decided at 180 billion KRW, and it is known that facilities capable of producing 35,000 tons annually will be secured. The 35,000 tons of precursors correspond to approximately 700 billion KRW in sales.
Yoon Cheol-hwan, a researcher at Korea Investment & Securities, said, "This is an investment scale that dispels recent concerns about the slowdown in the upstream industry growth," and analyzed, "The expansion will be completed by the end of the first quarter next year." He added, "From the third quarter of next year, the production facilities will operate at 100% capacity," and "It seems that the company has made facility investments after signing a long-term five-year supply contract with its customers."
Once precursor production is in full swing, sales are expected to increase rapidly. Korea Investment & Securities estimates that Eco&Dream will achieve sales of 149 billion KRW and operating profit of 10.2 billion KRW this year. Sales are expected to increase by 174.2% compared to last year, and operating profit is expected to turn positive.
Although there is a high possibility of performance improvement, concerns have been raised that the recent rapid stock price increase is excessive. Tesla, the U.S. electric vehicle company, shipped about 60,000 units from its Chinese factory last month, the lowest since December 2022. According to the China Passenger Car Association (CPCA), sales of electric vehicles and plug-in hybrids last month decreased by 9% compared to the same month last year.
Amid continued weak electric vehicle sales, the stock price of EcoPro BM, a secondary battery material company, fell 11.3% this year. LG Energy Solution, a secondary battery manufacturer, also dropped 9.4%. Overall, investment sentiment toward secondary battery-related companies' stocks has frozen. Concerns that the demand growth for secondary batteries will slow due to weak electric vehicle sales have influenced this.
A financial investment industry official advised, "Following last year, a concentration phenomenon is appearing again in the domestic stock market this year," and warned, "It is necessary to be cautious about excessive concentration and stock price rises."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
