The brokerage cut its target price to 154,000 won ($111) from 257,000 won, saying demand is expected to remain weak as major European customers delay new electric-vehicle projects until at least the first half of next year.
It also pointed to weaker demand in North America's energy storage system (ESS) market. One of the company’s major customers is now buying nickel-cobalt-aluminum (NCA) battery materials from multiple suppliers instead of relying on a single company, a shift that is expected to reduce Ecopro BM's sales.
Reflecting the weaker near-term outlook, the brokerage said third-quarter revenue is expected to reach 539.8 billion won ($389 million), down 6 percent from the previous quarter and 14 percent from a year earlier, while operating profit is expected to fall to 13.2 billion won, down 27 percent from the previous quarter and 74 percent from a year earlier.
The earnings slowdown has also reduced its earnings per share (EPS) to 585 won, pushing its trailing price-to-earnings (P/E) ratio to 161.2.
Ecopro BM, which was spun off from parent company Ecopro in 2016, makes high-nickel cathode materials used in lithium-ion batteries for electric vehicles and energy storage systems. It has been a key supplier to the fast-growing battery industry as global demand for EVs and energy storage continues to expand.
Despite the near-term challenges, Hana securities said investors should look beyond the current earnings slowdown. The brokerage expects orders set to begin contributing from 2028 are expected to drive a strong recovery in annual earnings, while battery stocks have historically been valued based on profits expected two to three years ahead rather than current results.
It added that the current share price already reflects most of the downside risks while failing to fully account for the company's long-term earnings potential, making the recent weakness a buying opportunity for long-term investors.
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