[Edaily Reporter kyoungeun kim ] On the 17th, NH INVESTMENT & SECURITIES maintained its “Buy” rating on LOTTE ENERGY MATERIALS CORPORATION(020150)and raised its target price by 8% from 51,000 won to 55,000 won.
The firm explained that while changes to earnings estimates were minimal, the adjustment reflects an increase in the peer multiples used to calculate the target price—from 18.0x to 19.5x—driven by rising stock prices across the sector.
Joo Min-woo, an analyst at NH INVESTMENT & SECURITIES, stated in a report on the 17th, “Chonbang demand is recovering rapidly, and the tight supply-demand balance even creates an environment where processing fees can be raised,” adding, “However, the company is expected to remain in the red through the first quarter of next year due to low yield rates and initial ramp-up costs.”
Regarding Chonbang demand, he added, “Electric vehicles (EVs) are benefiting from the North American original equipment manufacturer (OEM) effect, energy storage systems (ESS) from the SAMSUNG SDI CO.,LTD. effect, and copper foil for circuit boards from artificial intelligence (AI) demand.”
Accordingly, copper foil sales volume is projected to reach 29,000 metric tons in 2026 (a 31% year-over-year increase) and 44,000 metric tons in 2027 (a 53% year-over-year increase).
The analysis indicates that, amid a rapid recovery in ESS demand, the supply-demand balance for battery foil is tightening as global competitors pursue strategies focused on circuit foil production.
Research Analyst Ju said, “Consequently, the company plans to raise processing fees to $1–2 per kg (a 25–50% increase) starting in 2027,” adding, “We expect that every $1 increase in processing fees will contribute 50 billion won to operating profit, serving as a catalyst for improved profitability.” However, he added, “The company is expected to remain in the red through the first quarter of next year due to low yield rates and initial ramp-up costs.”
NH INVESTMENT & SECURITIES estimated that LOTTE ENERGY MATERIALS CORPORATION(020150)would report third-quarter revenue of 263.4 billion won (up 83% year-over-year and 36% quarter-over-quarter) and an operating loss of 22.9 billion won (operating profit margin (OPM) of -9%). These figures fall short of the market consensus of 261.8 billion won in revenue and an operating loss of 17.9 billion won.
Analyst Ju stated, “Copper foil sales volume is estimated at 8,400 metric tons (up 83% year-over-year, a 37% increase from the previous quarter), but the deficit is expected to widen due to low yields on new products—such as 6-micrometer (μm) battery foil for energy storage systems (ESS) and Grade 3 and 4 ultra-low-light-reflectance (HVLP) circuit foil—combined with the fixed-cost burden (estimated at 5 billion won per quarter) resulting from the launch of the new production line at Plant 5 in Malaysia.”
He continued, “While it is encouraging that shipments of Grade 3 HVLP circuit foil for central processing units (CPUs) began in August, challenges regarding yield improvement remain, and shipments of Grade 4 HVLP circuit foil for graphics processing units (GPUs) have not yet commenced.” He added, “Although strong demand for 6-micrometer (μm) battery foil for ESS is being confirmed in Chonbang, yield improvement is similarly necessary in this area.”