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Photo = Yonhap news |
[Alpha Biz= Kim Sangjin] On Wednesday, NH Investment & Securities revised its target price for Ecopro BM (247540) downward by 14.8% from KRW 176,000 to KRW 150,000, citing expectations of weak Q4 performance. However, the firm maintained its "Buy" rating for the stock.
NH Investment stated, “Q4 revenue is projected to decline by 62% year-on-year to KRW 452.9 billion, with an operating loss of KRW 24.9 billion, falling short of consensus estimates (KRW 530.6 billion in revenue and a KRW 12.2 billion operating loss). This underperformance is due to weak cathode material sales as downstream customers continued their planned inventory adjustments.”
The firm added, “Despite the inclusion of one-off year-end costs, approximately KRW 10 billion in inventory valuation loss reversals are expected, improving the operating profit margin to -5.5% compared to the previous quarter. While demand for EV and Non-IT sectors remains sluggish, energy storage systems (ESS) shipments have increased, stabilizing ESS at about 40% of total sales.”
NH Investment noted, “Changes in EV policies in the U.S., U.K., and Europe are becoming less favorable (lower regulations and reduced subsidies), prompting a downward adjustment to medium-term sales growth expectations. Additionally, the recent issuance of perpetual bonds and the resulting increase in interest expenses have led to an upward revision of the discount rate (WACC) from 5.1% to 5.7%.”
The brokerage emphasized, “The key to a recovery in earnings lies in a rebound in sales to Samsung SDI in Europe and SK On’s sales to Ford and VW in the U.S. While the shifts in EV policy stances in Europe and the U.S. necessitate lowering short-term growth expectations, a gradual recovery in sales volumes remains intact.”
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
