EcoPro BM stock on a roll on $8.6 bn order from SK Inno, more may come

2021.09.10 12:52:59 | 2021.09.10 16:17:17

[Graphics by Lee Eun-joo and Song Ji-yoon]이미지 확대

[Graphics by Lee Eun-joo and Song Ji-yoon]

EcoPro BM Co., a South Korean battery materials manufacturer publicly trading for the third year, is under full limelight after it signed a three-year 10.1 trillion won ($8.6 billion) contract to supply high-nickel NCM cathode materials to SK Innovation Co.

Kosdaq-listed shares of EcoPro BM rose 12 percent to close at 400,500 won on Friday, after touching a new 52-week intraday high of 405,000 won. The stock had finished previous session up 6.21 percent.

Investors flocked to the unfamiliar name after it disclosed a 10.1 trillion won deal to supply high-nickel NCM cathode materials to SK Innovation for three years from 2024.

In February last year, SK Innovation and EcoPro BM signed a 2.7 trillion won supply deal for cathodes until 2023. The latest contract would stretch the supply volume to more than 300,000 tons from the previous 20,000 tons.

Cathode materials are a key material that determine battery performance. They account for about 50 percent of battery cost.

Brokerages also rushed to raise their target stock price of EcoPro BM to over 500,000 won as they became sanguine about new orders and expansion.

Mirae Asset Securities Co. upped EcoPro BM’s stock price target from previous 240,000 won to 530,000 won and Daishin Securities from 350,000 won to 500,000 won.

At 500,000 won, the company’s market cap would surge to 10.96 trillion won from current 7.8 trillion won. EcoPro BM command the second in Kosdaq cap after Celltrion Healthcare.

Han Sang-won, researcher at Daishin Securities, said that EcoPro BM’s NCM production capacity os currently at 60,000 tons and would have to expand. He projected the company to unveil a plan to build a factory in the United States this year and bump up capacity to 400,000 tons by 2025.

Kim Chul-joong, a researcher at Mirae Asset Securities, assumed the new contract will mostly go to SK Innovation’s U.S. factory and its client Ford.

Kim expected EcoPro BM to win similar large-scale orders in the coming year, including from Samsung SDI serving carmakers like Stenllantis, Volkswagen, and Rivian.

[Photo provided by EcoPro BM Co.]이미지 확대

[Photo provided by EcoPro BM Co.]

A surge in cathode materials order comes amid growing demand for batteries globally, especially with Korean players speeding up efforts to establish their own battery materials supply network and enhance value chain.

Through the long-term supply, SK Innovation would be securing high-performance cathode materials supply from home turf. EcoPro BM is investing 500 billion won additionally to cathode facility under construction in Pohang, North Gyeongsang Province. The company had previously pledged to invest 1.7 trillion won by 2024 to complete a factory for secondary battery cathode material full-cycle system in Pohang in North Gyeongsang Province with a 100,000-ton capacity by 2026..

The company is also a leader in high-nickel cathode materials that are used in high-performance batteries. High-nickel is a battery that has high composition of nickel in NCM cathode material that includes nickel, cobalt, and manganese. The higher the nickel, the better battery performance.

Jee Dong-seob, chief executive of SK Innovation’s battery business, said that the company will enhance partnership with EcoPro BM from battery production to core materials production.

SK Innovation developed world’s first NCM9 battery through its partnership with EcoPro BM in 2019. The battery maker will supply batteries applying NCM9 cathode materials to U.S. Ford’s electric truck model F-150 Lighting.

SK Innovation and EcoPro BM are likely to extend their partnership in Europe as Blue Oval SK, a joint venture between SK Innovation and Ford, plan to build a production facility in Europe in addition to a battery cell and module production factory in the U.S. with annual capacity of 60 gigawatt hour (GWh).

EcoPro BM last month announced it would add a 30,000 ton cathode materials production facility in Europe in 2024, the first overseas site, and expand to 110,000 tons in 2025.

EcoPro BM had been founded in 1988 by Lee Dong-chae at a 33-square-meter office room in Seocho-dong, southern Seoul. The company’s cathode materials business gained traction in 2006 upon acquiring cathode materials business from Cheil Industries. EcoPro BM successfully developed the country’s first high-nickel NCA cathode materials in 2008 after continuous research and development at a time when rechargeable batteries had not gained much attention. The company kept to the path to become world’s No. 2 NCA cathode materials producer and Korea’s top cathode materials provider with a capacity of 59,000 tons.

By Choi Keun-do, Ahn Byung-joon, and Lee Eun-joo

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