KB Securities Lowers Price Target on Ecopro BM to
Photo = Yonhap news
[Alpha Biz= Paul Lee] KB Securities has revised its target price for Ecopro BM downward from KRW 140,000 to KRW 130,000, a 7% cut, citing weaker shipment forecasts to Europe from key clients and a stronger Korean won against the U.S. dollar. The adjustment reflects a 38% reduction in the firm’s estimated operating profit for 2024.
Following the revision, the company’s 12-month forward valuation stands at a PER of 883.4x and PBR of 7.43x.
According to analyst Changmin Lee, Ecopro BM’s 2025 revenue is projected at KRW 2.69 trillion, down 3% year-on-year, with operating profit expected to reach KRW 46.9 billion, returning to profitability. While demand for NCM (nickel-cobalt-manganese) cathodes from SK On is expected to remain solid in H2, shipments to Europe by major clients are recovering at a slower-than-anticipated pace, he noted.
Lee added that the USD/KRW exchange rate will remain a key variable for Ecopro BM’s earnings going forward.
For Q2 2024, the company’s revenue is forecast at KRW 702.3 billion, down 13% YoY, while operating profit is projected to surge 243% YoY to KRW 13.3 billion, broadly in line with consensus estimates. The sharp profit rebound is attributed to a low base effect and a rise in shipments to SK On, driven by increased demand tied to Hyundai Motor Group’s new U.S. Metaplant and BlueOval SK’s upcoming operations.
However, shipments to Europe are expected to fall short of market expectations, with the volume improvement in cathode materials likely limited to just 17% QoQ, Lee cautioned.
He also pointed out that the average USD/KRW exchange rate fell from 1,453 in Q1 to 1,405 in Q2, which has in turn reduced the anticipated reversal of inventory valuation allowances to mid-KRW 10 billion levels, below prior estimates.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
