South Korea’s electric vehicle (EV) component makers Iljin Materials Co., Sang-A Frontec Co., and Samwha Capacitor Group whose shares have rallied on their strong first-quarter earnings will likely see further growth in their shares and earnings amid rising demand for environmentally-friendly electric vehicles.

According to Korea Exchange on Friday, the total market capitalization of Iljin Materials, Sang-A Frontec, and Samwha Capacitor amounted to 1.16 trillion won ($1.03 billion) based on their Friday closing stock prices, up 43.1 percent since March 2 when their combined market cap reached 813.9 billion won amid growing expectations for solid first-quarter earnings.

By company, shares of Samwha Capacitor that produces electric condensers for electric vehicles have surged 50 percent from 9,630 won on March 2 to 14,450 won on Friday in the Korea’s main bourse Kospi, and those of Iljin Materials, also listed in the Kospi, that produces special elec-foil or copper foil used in rechargeable battery cells have soared 43.4 percent from 15,200 won to 21,800 won. Over the same period, shares of secondary Kosdaq market-listed Sang-A Frontec that manufactures secondary cell components jumped 34.7 percent from 8,870 won to 11,950 won.

The stocks of the so-called hidden champion trio in the Korean EV component sector have rallied on their stellar earnings in the first quarter ended March this year, and they are poised to rise further on further growth in their future earnings.

For the January-March period, Iljin Materials has raised 14.0 billion won in operating income, up 137 percent from a year ago and beating the market estimation of 8.7 billion won. The company could improve its profits more than expected thanks to the surge in demand for EV-use rechargeable batteries on top of the recovery in the information technology (IT) industry, an unnamed official from Iljin Materials said. The company’s decision to shift its focus to more profitable products after shutting down lines producing loss-making products has also contributed to the gain in its earnings, the official added.

Over the same period, Samwha Capacitor has raked in 4.3 billion won in operating profit, up 59 percent from a year ago on sales of 46.8 billion won, 11 percent higher from a year earlier. On expectations for further improvement in earnings amid growing demand for the company’s core product electric power capacitors, local brokerages have revised upward their target prices for the company’s stock. To meet growing demand for its product, Samwha Capacitor that has been providing its EV parts to local auto makers Hyundai Motor Co. and Kia Motors Corp. recently added Delphi Automotive PLC and other Chinese companies as its new customers.

Sang-A Frontec also reported stellar earnings in the first three months of this year, raising 2.7 billion won in operating which was 51 percent higher from a year ago thanks to growing popularity of electric vehicles by Bayerische Motoren Werke AG (BMW) and the release of Volkswagen’s upgraded model of e-Golf electric vehicle in Europe and the United States. Both finished car makers employ EV parts that also use the Korean auto component maker’s parts.

By Yoon Jin-ho

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]