[Click eStock] L&F Faces Poor Performance in Q4... Target Price Downgraded

Kiwoom Securities lowered the target price for L&F to 160,000 KRW on the 4th, citing unavoidable short-term earnings weakness. The investment rating was maintained as 'Buy.'

In a report released that day, Kiwoom Securities analyst Kwon Junsu stated, "As identified in this earnings announcement, due to the high concentration of a single major customer and inventory adjustments, weak performance is expected to continue for the time being, and as a result, the turnaround to profitability is projected to be delayed until after the second quarter of next year." He added, "We have lowered the target price reflecting changes in earnings estimates."

L&F's third-quarter sales fell 72% year-on-year to 351.6 billion KRW, and operating profit turned to a loss of 72.4 billion KRW.

Analyst Kwon explained, "Sales significantly declined quarter-on-quarter due to a drop in ASP caused by falling lithium prices and reduced shipments from customer inventory adjustments." He analyzed, "The impact of inventory adjustments due to Tesla's model change (NCMA90), delayed recovery of sales to European customers, and changes in customer ESS chemistry (NCM523 to LFP) led to cathode material demand falling short of initial expectations."

Fourth-quarter sales are expected to decrease 48% year-on-year to 343.9 billion KRW, with an operating loss of 82.3 billion KRW.

Analyst Kwon noted, "Recently, L&F's stock price rebounded following Tesla's earnings announcement, supported by aggressive 2025 guidance from upstream customers and news of 4680 mass production." He added, "From 2025 onwards, gradual earnings improvement is anticipated due to increased sales from new vehicle launches by major upstream customers and the resolution of potential inventory valuation losses, so we believe it is necessary to pay attention to L&F."