[Click e-Stock] "EcoPro BM to Swing to Loss in Q4... Target Price Cut"

Hana Securities lowered its target price for EcoPro BM to 112,000 won from 151,576 won on Tuesday, saying the company is expected to inevitably swing to a loss in the fourth quarter of this year. It maintained its “Buy” rating.

“We lowered our forecast for EcoPro BM’s cathode material shipments, reflecting weak shipments of Korean batteries to Europe, and cut our target price accordingly,” said Kim Hyun-soo, an analyst at Hana Securities. “We maintain our Buy rating, taking into account the potential for a rapid increase in shipments from the company’s European plant starting in 2028 and the value of earnings from its nickel smelter, which is scheduled to begin shipments in the second quarter of next year. However, we believe it is too early to factor these two drivers into the share price, so we recommend a trading approach within the maximum value of 11 trillion won that can be justified based on the company’s existing ternary cathode material production capacity (CAPA).”

EcoPro BM reported third-quarter revenue of 557.9 billion won, down 11% year on year, and operating profit of 12 billion won, down 76%. “As weak shipments from Samsung SDI’s European electric vehicle (EV) battery plants continued, EcoPro BM’s ternary cathode material shipments also fell 34% from the previous quarter. However, shipments of products for energy storage systems (ESS) and power tools rose 173% and 16%, respectively, partially offsetting weakness in the EV segment,” Kim said. “Operating profit margin fell by 0.9 percentage points as the fixed-cost burden increased after the Hungarian plant was shut down in September due to local environmental regulatory issues.”

A swing to a loss in the fourth quarter appears inevitable. “We expect fourth-quarter revenue to rise 3% year on year to 510.2 billion won, with an operating loss of 10.3 billion won, marking the company’s first loss in eight quarters,” Kim said. “A decline in revenue will be unavoidable as the company’s customers continue to see weak shipments in their European EV businesses.” Profitability is also expected to worsen as the fixed-cost burden increases following the shutdown of the Hungarian plant, while one-off gains recorded in the third quarter—such as the reversal of inventory valuation losses from the lagged recognition of rising metal prices and the capitalization of development costs—dissipate.

This content was produced with the assistance of AI translation services.