Korea's battery supply chain players stay committed to big capex plans

South Korean secondary battery material makers stay committed to aggressive expansion plans regardless of headwinds from surging interest rates and foggy climate for global economy.

L&F and SungEel HiTech were amongst the top 5 listed companies disclosing largest capital investment versus equity in the July-September period, according to stock market operator Korea Exchange on Tuesday.

L&F, a Kosdaq-listed battery material manufacturer topped the list. It announced in August that it will spend 650 billion won ($457 million) to ramp up cathode materials production. Its new factory, to be built at its Gumi manufacturing base in Korea, will manufacture mainly high-nickel materials for use in next-generation electric vehicles. The plant with maximum annual capacity of 90,000 tons will become operational in the first half of 2024.

The company is also seeking to set up a factory in the United States to meet the growing demand for high-nickel cathode materials and the new U.S. law requiring domestic sourcing for batteries for EVs.

The Korean industry ministry on Sept. 14 rejected L&F’s factory project in the U.S., citing concerns for a leak in strategic technology. L&F plans to re-file for approval.

Analysts see L&F as one of the most attractive stocks to invest due to its strong presence in high-nickel battery materials market and aggressive expansion plans.

The company’s income statement however is expected to deteriorate from the previous quarter on sharp increase in raw materials costs. The company is projected to report 84.2 billion won in operating income and 1.25 trillion won in revenue in the third quarter ended September.

SungEel HiTech, a battery recycle company that went public on the Kosdaq in July, is spending IPO proceeds on facilities expansion. Last month, the company disclosed a new facility investment worth 214.7 billion won, which is tantamount to 82 percent of its equity capital.

Analysts find the company’s business outlook bright as recycling of lithium, cobalt and other materials used in rechargeable batteries would grow in line with greater application of batteries.

SungEel HiTech remains a select with the technology of recycling rechargeable batteries in mass.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]