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Battery materials

EcoPro BM to reveal overseas production plans in mid-Oct

It already set up a unit in Georgia, US, where SK Innovation is building battery plant

By Sep 10, 2021 (Gmt+09:00)

SK Innovation's EV battery plant under construction in the US state of Georgia
SK Innovation's EV battery plant under construction in the US state of Georgia

South Korea’s battery materials maker EcoPro BM Co. is set to unveil its plans for manufacturing in other countries including the United States around the middle of next month.

The cathode materials producer needs to build overseas factories and raise production capacity in order to meet a 10.1 trillion won ($8.6 billion) supply contract with SK Innovation Co. Its capacity expansion is likely to help the company’s stocks gather momentum, analysts said.

EcoPro BM’s share on Sept. 10 jumped 12% to close at 400,500 won, far outpacing a 0.32% rise in the wider Kosdaq. The stock hit a record high of 405,000 won during the session.

“We will announce plans on overseas capacity expansion in mid-October when we complete construction of the EcoPro Pohang Campus,” said Lee Dong-che, the founder and chairman of EcoPro, the holding company of EcoPro BM, referring to its secondary battery production complex in Pohang, 370 kilometers southeast of Seoul.

“We will unveil details on the plans including the US, while announcing mid- to long-term development for the next five to ten years,” Lee told The Korea Economic Daily in a telephone interview on Sept. 9.

In November 2020, EcoPro BM established a unit in Georgia, US, where SK Innovation is building a battery complex. The battery materials producer is considering a production base there.

The company needs to produce 100,000 tons of high-nickel cathode a year for the supply deal with SK Innovation, the industry sources said. It had been scheduled to secure an annual capacity of 60,000 tons by 2023.

EcoPro BM cannot add all the capacity only in Korea since US and European authorities require automakers to use batteries produced in their countries to create jobs.

STOCK PRICES TO GATHER MOMENTUM

Its stock price is expected to rise further as the company accelerates expansion of overseas production, which will help realize earnings forecast.

EcoPro BM’s 12-month forward price-to-earnings ratio (PER) is about 60 times, the second-highest after POSCO Chemical whose ratio is 70 times, among secondary battery materials stocks, according to the financial data company FnGuide Inc.

But the ratio drops to less than 20 times if earnings for 2024 are applied to the current stock price.

“We propose a target PER of 72 times based on 2022 earnings by adding a 20% premium from the previous 60 times,” said a Korea Investment & Securities analyst Kim Jung-hwan.

“Through EcoPro Global, it is trying to internalize value chains not only for overseas cathode materials business but also precursor, a raw material of cathode materials, and battery recycling.”

Write to Yun-Sang Ko at kys@hankyung.com

Jongwoo Cheon edited this article.

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