EcoPro BM stock dips 3% due to Q3 performance

[Courtesy of EcoPro BM]

EcoPro BM Co.’s stock price dipped on Monday morning following its third-quarter earnings shock, with shares in parent company, EcoPro Co. seeing a simultaneous drop.

EcoPro BM was sold for 237,000 won ($175.17) per share on the Kosdaq as of 9:03 a.m., down 3.66 percent compared to the closing price on the previous trading day, while EcoPro traded at 788,000 won, down 5.40 percent.

According to the announcement made after the trading close on Friday, EcoPro BM’s preliminary operating profits for the third quarter were 45.9 billion won, representing a significant year-on-year drop of 67.6 percent and falling short of the market projection of 67.8 billion won by 32.3 percent.

Analysts attributed the fall in cathode material prices as the primary reason for the company’s downward performance in the third quarter. “The main cause of the profit decline is the drop in cathode material prices due to falling lithium prices,” Eugene Investment & Securities Co. analyst Han Byung-hwa said, adding that the continuing downward trend in the export unit price of cathode materials in the fourth quarter.

Han maintained a “sell” opinion on the battery material company with a target price of 200,000 won.

Although EcoPro BM remains the most competitive among cathode material manufacturers, the unreasonably high short-term price makes it less attractive for investment,” Han said. The analyst stated that a fundamental upward transition for the company is feasible if the growth of the electric vehicle market accelerates beyond the current phase and the competition among domestic and international cathode material manufacturers eases.

Another analyst lowered EcoPro BM’s target price from 350,000 won to 270,000 won, also predicting that cathode material prices would continue to decline until the first quarter of 2024.

“The significant drop in share prices that began in August, driven by concerns about an expansion of LFP battery market share and the poor third-quarter performance, is part of price normalization,” HI Investment & Securities Co analyst Chung Won-suk said.

Chung suggested that there will be limited room for any stock price increases in the near term for the company, given the reduced electric vehicle battery demand in Europe and the increased possibility of a change in administration ahead of the U.S. presidential election next year, leading to uncertainty about the current Biden administration’s green policies.