[Click eStock] "Lotte Energy Materials Target Price Raised to 60,000 Won"

On the 1st, Samsung Securities raised the target price of Lotte Energy Materials to 60,000 KRW and maintained a buy rating.

Samsung Securities expects Lotte Energy Materials to record its highest quarterly sales in Q1 this year due to quality issues faced by competitors. Sales in Q1 are expected to reach a quarterly record due to quality issues with competing suppliers targeting North American customers. Despite variables such as selling price and exchange rates, the company's copper foil segment sales in Q1 are projected to increase by 44% year-on-year and 4% quarter-on-quarter to 193.3 billion KRW, with consolidated sales potentially reaching a quarterly high of 244.9 billion KRW. However, operating profit is expected to show limited improvement at 4.9 billion KRW (operating margin of 2%) compared to the sales increase.

In the second half of the year, the new factory in Malaysia is scheduled to begin operations, and there is a possibility of early start-up of a battery joint venture with a key customer. As the cost-competitive 5th and 6th factories in Malaysia ramp up, shipment increases and profitability recovery are expected due to long-term supply contracts with customers. Additionally, the SOP (Start of Production) timing of the battery joint venture factory with a key customer may be advanced earlier than expected, making the sales increase in the second half more pronounced.

Rising logistics costs pose a risk, but the impact of oversupply from China is considered limited. Despite concerns about oversupply from China, the situation where the customer's supply share is not significantly affected is viewed positively. On the other hand, for customers in North America and Europe, the risk of increased logistics costs through the Panama Canal and the Suez Canal is considered a burden.