Korean secondary battery, cathode stocks gain on Tesla’s robust sales report

[Photo by AFP/Yonhap]

Stocks of South Korean secondary battery and component manufacturers are flying high following the surprising sales announcement by U.S. Tesla Inc., the world’s top electric carmaker, on Sunday.

Shares of EcoPro Co., the holding company of Korea’s leading cathode materials manufacturer EcoPro Group, soared 20.42 percent to close at 908,000 won ($695.3) on Monday. Shares of its subsidiary EcoPro BM Co. also surged 5.82 percent.

Shares of POSCO Future M Co., a cathode materials maker, rose 4.53 percent.

Secondary battery stocks also finished higher, with Samsung SDI Co. rising 7.17 percent, LG Chem Ltd. 3.6 percent, and LG Energy Solution Ltd. 3.62 percent.

“The secondary battery value chain is rising on reports of Tesla’s strong second-quarter sales,” said Lee Kyung-min, an analyst at Daishin Securities Co.

Foreign investors, who had been net sellers last month, turned as net buyers Monday, purchasing more than 470 billion won in large-cap stocks such as secondary batteries.

The strong prices come after Tesla announced Sunday, local time, that it posted deliveries of 466,000 vehicles in the second quarter, up 83 percent from a year ago. The number of deliveries in the previous quarter was 420,000.

The significant increase in deliveries that beat analyst consensus of 440,000 units is attributed to Tesla’s aggressive price cuts.

In January this year, Tesla reduced prices of its models by 6~20 percent amid growing competition in the global EV market. Tesla has cut prices in Korea, Japan, Europe, and China as well as in the U.S.

While deliveries have increased significantly, the price cut is expected to result in lower operating margins.

Tesla’s operating margin fell to as low as 11.4 percent in the first quarter, down from 19.2 percent in 2022. The lower operating margin is likely to be confirmed in the company’s second-quarter earnings report slated for July 19.

Despite the drop in profit margins, Tesla’s shares have risen sharply this year. The stock price has jumped 142 percent this year, hitting $261.77 on June 30, after plunging to $108 in December last year.