[Edaily Reporter Shin Ha-yeon ] On the 9th, SKSecurities maintained its “Buy” rating on LOTTE ENERGY MATERIALS CORPORATION(020150), noting that while a shortage of copper foil for printed circuit boards (PCBs) is expected in 2027, the company is expected to benefit from the expansion of its copper foil business for AI circuit boards. However, the firm lowered its target price from 90,000 won to 60,000 won following a valuation adjustment.

Park Hyung-woo, an analyst at SKSecurities, stated, “A copper foil shortage is expected in 2027,” adding, “Copper foil supply is failing to keep pace with the expansion of substrate production, and as domestic battery foil manufacturers are also reducing capacity and delaying expansions, the supply-demand balance for copper foil is expected to improve.”

He continued, “The shortage of PCB materials is expected to emerge earlier and be more severe than that of PCBs themselves,” explaining, “We are in the process of converting the battery foil line at the Iksan plant to produce 16,000 metric tons of circuit foil annually, with completion targeted for the first half of next year.” He added that the converted production volume is scheduled to be supplied for AI network motherboards, and that the company also plans to gradually expand shipments of HVLP (high-specification circuit foil) products for the AI sector.

Although the company expects to remain in the red in the second quarter, it anticipates an improving trend. Second-quarter revenue is estimated at 193.1 billion won, with an operating loss of 20.1 billion won. While shipments of circuit foil are expected to increase by 25% and battery foil by 20% compared to the previous quarter, the pace of profit improvement is expected to be limited due to the lower average selling price (ASP) of battery foil.

For the second half of the year, attention is focused on the potential for rising capacity utilization rates and price recovery. Analyst Park stated, “While demand for energy storage systems (ESS) in North America is driving up battery foil shipments, suppliers are reducing their battery foil capacity by shifting to circuit board production,” adding, “Monthly capacity utilization rates are expected to rise to as high as 80% in the second half, and we are watching for the possibility of price recovery in tandem with improved supply and demand conditions.”

He assessed, “Among domestic battery material companies, LOTTE ENERGY MATERIALS CORPORATION is the only viable option for the localization of circuit foil for PCBs and CCLs,” adding, “Circuit foil is a business with significant profit leverage, and the operating profit margin could well exceed 10% in 2027–2028.” He added, “The recent decline in the stock price could present a buying opportunity, and we maintain our view that it is the top pick within the battery materials sector.”

Meanwhile, regarding the target price reduction, he explained, “The target price was calculated by applying a price-to-earnings ratio (PER) of 15—the lowest among AI substrate peers—to the estimated earnings per share (EPS) for 2028,” adding, “We lowered the target multiple in consideration of the gap between the previous target price and the current stock price.”