Korean Companies' Market Influence to Expand

The author is an analyst of NH Investment & Securities. He can be reached at j.ko@nhqv.com. -- Ed.

 

Maintain Positive stance towards rechargeable battery sector 

We maintain our Positive stance towards the rechargeable battery industry, as the sector’s growth potential should only brighten further on a paradigm shift towards EVs in the auto/parts sector and the growing penetration of renewable energy.

Domestic rechargeable battery makers’ market influence to expand amid rising demand

The rechargeable battery market is forecast to expand on an increase in the number of EV-dedicated platforms from 2021 and the rising significance of renewable energy as a means to reduce GHG emissions. We expect related firms to hike production capacity to meet growing demand while striving to improve performance and reduce costs. Boasting superior competitiveness to their foreign counterparts, domestic companies should enjoy greater influence in the market. We estimate that domestic firms’ EV rechargeable battery supply will rise from 59GWh in 2020 to 180GWh in 2021 to 271GWh in 2022, with their ESS rechargeable battery supply increasing from 12GWh in 2020 to 20GWh in 2021 to 30GWh in 2022. Domestic companies are expected to pave the way for growth in line with EV and ESS market expansion.

Focus on rechargeable battery-related companies with strong competitiveness

In a nutshell, we believe that the rechargeable battery sector will become ever more attractive in line with strengthening market fundamentals. That said, it remains necessary for investors to seek out promising plays boasting strong competitiveness which can secure loyalty from client companies.

Among cell makers, we recommend Samsung SDI and LG Chem, as: 1) they are capable of producing a range of rechargeable battery cell types; 2) they have constructed production plants near major markets; and 3) in addition to internalization of major rechargeable battery materials, they are expected to further strengthen relations with client companies. Meanwhile, we believe that Chunbo and EcoProBM deserve special attention among materials companies. Chunbo is capable of producing a variety of special electrolyte products, for which the end-clients are leading global rechargeable battery makers. EcoProBM should also exhibit strong growth going forward, on: 1) the production of high-nickel cathode materials; and 2) a JV with Samsung SDI.

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