[Click eStock] "WCP, Increased Costs Amid EV Demand Slump... Target Price Down"

Shinhan Investment Corp. downgraded both the earnings estimates and target price for the secondary battery separator manufacturer Double WCP (WCP) on the 8th. The assessment is that the first-quarter performance fell short of market expectations due to increased cost burdens from expanded investments, and the stock price is somewhat burdensome relative to earnings.

Min-ki Choi, an analyst at Shinhan Investment Corp., stated in a report on the same day, "WCP is continuing aggressive investment efforts to operate lines 7 and 8 in Chungju within this year and to fully operate lines 1 to 8 in Hungary by 2026," adding, "With weak EV demand and rising costs, poor performance this year is inevitable."

WCP recorded weak profitability in the first quarter of this year. Quarterly sales increased by 63% year-on-year to 122.4 billion KRW, but operating profit dropped by 96% to only 600 million KRW. The analyst explained, "Costs such as depreciation increased due to new manufacturing methods, the Hungary plant, and coating line investments," and added, "Logistics costs also increased, worsening profitability."

He stated, "Reflecting the slower-than-expected recovery in EV demand, we set the target price at 44,000 KRW, 12% lower than the previous target." He further added, "For the stock price to rise, securing orders commensurate with the expansion will be necessary."