 |
Photo: L&F |
[Alpha Biz= Paul Lee] Seoul, September 17, 2025 — Samsung Securities has raised its target price for battery materials producer L&F from KRW 95,000 to KRW 100,000, noting that the company’s fundamentals are rebounding more clearly than those of its competitors.
In a research note, analyst Cho Hyun-ryeol projected L&F’s third-quarter operating profit at KRW 17.8 billion, with an operating margin of 2.7%, well above the consensus estimate of KRW 5 billion. He explained that profitability is expected to return for the first time in eight quarters as production utilization exceeds breakeven levels, driven by higher sales volumes.
Although average selling prices (ASP) are forecast to decline by about 6% quarter-on-quarter due to lower lithium prices, sales volumes are projected to recover further. Third-quarter sales are expected to exceed 20,000 tons — L&F’s breakeven level — resulting in a turnaround in operating profit.
Cho also highlighted the successful completion of L&F’s KRW 300 billion convertible bond with warrants issuance. The bonds were listed on September 10, and the detached warrants are scheduled to list on September 22. The exercise price of KRW 50,020 per share represents a 29% discount to the current stock price.
Assuming full exercise, L&F’s debt ratio and net debt ratio would fall from 462% and 357% to 288% and 223%, respectively. He added that short-selling pressure linked to delta-hedging before the warrant listing has now eased, which is also a positive factor.
On the demand side, while the removal of U.S. EV subsidies is expected to trigger a sharp drop in demand from the fourth quarter, L&F’s limited exposure to the U.S. market is seen as an advantage. Instead, the company supplies leading EV manufacturers primarily in China and Europe, with its products used in recently launched derivative models as well.
“Considering leading EV makers’ expansion plans in Europe, new derivative model launches, and L&F’s limited exposure to the U.S. market, the company is expected to demonstrate a more pronounced fundamental recovery compared to peers,” Cho said. He added, “Next year, L&F will become the only domestic producer of cathode materials for lithium iron phosphate (LFP) batteries, providing further momentum for fundamental improvement.”
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
