There was ‘cheering’ when the production plan for the new model 2 was confirmed…
Spurring internalization of batteries… “It is a short-term good news for cell companies, but ultimately deteriorates profitability.”
Tesla ELS outstanding balance is 1.1 trillion… Some investors are still in the loss zone
Photo = Reuters The good news from Tesla ended in one day. As the leading company in the global electric vehicle market refined its growth strategy, the stock prices of domestic secondary battery-related stocks, which had been depressed, showed a refreshing upward trend for the first time in a while, but profit-taking listings were made within a day.
As of 9:39 a.m. on the 25th LG Energy Solutionwas down 6,000 won (1.56%) from the previous day to 379,000 won, and Samsung SDI was down 1,000 won (0.24%) to 421,000 won. L&Fis trading at 157,800 won, down 2,200 won (1.38%), and Ecopro BM is trading at 239,500 won, down 6,000 won (2.44%).
Foreigners are selling a large number of secondary battery-related stocks except Samsung SDI. As of 9:30, the net selling volume to LG Chem was 6.9 billion won (2nd place), EcoPro BM was 3.3 billion won (8th place), and LG Energy Solution was 2.3 billion won (14th place).
This appears to be the result of profit-taking listings following the large increase the previous day. On the 24th, LG Energy Solution (4.05%), Samsung SDI (3.69%), L&F (5.89%), and Ecopro BM (5.14%) showed strength of more than 3%.
Musk also acknowledges ‘chasm’… Only a brief rise due to concerns about sluggish demand
The good news that Tesla presented as a blueprint for the future spread to the Korean stock market, but the effect lasted only for one day. This is because the growth in demand for electric vehicles, which determines immediate performance, has slowed. In fact, Tesla’s CEO, Elon Musk, also acknowledged the ‘chasm’ (temporary slowdown in demand before popularization) of electric vehicles in this conference call. He predicted, “Many companies postponed investments in pure electric vehicles (EVs) and adopted plug-in hybrids (PHEVs),” and predicted, “This phenomenon will continue for the next few years.”
Domestic secondary battery companies are also suffering from poor performance due to slowing growth in demand for electric vehicles. LG Energy Solution’s first quarter performance announced today was sluggish as expected. LG Energy Solution announced that its consolidated operating profit in the first quarter of this year was provisionally calculated to be KRW 157.3 billion, a 75.2% decrease from the same period last year. The operating profit margin is 2.6%. Sales amounted to KRW 6.1287 trillion, a 29.9% decrease compared to the same period last year. Net profit decreased by 62.3% to 212.1 billion won. Elon Musk, CEO of Tesla. Photo = Reuters The reason operating profit is in surplus is because the Advanced Manufacturing Production Tax Credit (AMPC) of 188.9 billion won under the U.S. Inflation Reduction Act (IRA) is included. Excluding AMPC, operating profit in the first quarter was a deficit of 31.6 billion won. Lee Yong-wook, a researcher at Hanwha Investment & Securities, said, “LG Energy Solution’s shipments are continuing to be sluggish,” and “the impact of sluggish demand in Europe and sluggish Tesla sales is significant.”
Samsung SDI and POSCO Future M, which have relatively little connection to Tesla, also lowered their annual operating profit consensus by 2.38% and 11.76% in the past month. An analyst in charge of strategy at a securities firm said, “Because the stock prices of rechargeable battery stocks have fallen significantly, there may be an opportunity to make significant profits at the end of the second or third quarter,” adding, “In the long run, this is an event that can dramatically increase the profit margin of the rechargeable battery industry.” “If it doesn’t happen, it will be difficult to become the leading state,” he said.
“We expect to benefit from Tasla’s battery internalization process, but… Ultimately, profitability ↓”
However, the domestic secondary battery sector can benefit from Tesla’s roadmap. At Tesla’s first quarter earnings conference call held on the 23rd (local time), the story that investors cheered the most was the announcement that it would accelerate the mass production of Model 2. It has been brought forward from June next year to the end of this year or early next year. Previously, Reuters reported that Tesla may postpone or give up on mass production of Model 2 to increase investment in artificial intelligence (AI) and self-driving cars (robotaxi), raising concerns about performance growth.
In addition, in the conference call, △4680 (diameter 46mm, length 80mm) battery production capacity increased by about 20% in the first quarter △Excess demand for Cybertruck △Discussion on supply of full autonomous driving program (FSD) with finished car manufacturers △Optimus robot and robotaxi The release plan was announced. Cho Hee-seung, a researcher at Hi Investment & Securities, explained, “Sharing technological progress in more detail than before has had a positive effect on stock prices.”
For now, the domestic secondary battery industry can expect to benefit from Tesla’s internalization of the 4680 battery. As recently as the 22nd, there was news that LG Energy Solutions and Tesla were pursuing an electrode supply contract worth 6 trillion won. Noh Woo-ho, a researcher at Meritz Securities, said, “Considering Tesla’s possible production scale of electric vehicles next year and energy storage system (ESS) installation guidance (its own forecast), 100% internalization of 4680 batteries is impossible,” adding, “We need help from existing suppliers.” analyzed. He added, “There have been many cases of supply contracts between Tesla and domestic battery material companies from last year to this year, so in the future, cases of cooperation with domestic material companies tailored to Tesla’s secondary battery mass production scale will also increase.”
On the other hand, some voices are concerned that the profitability of the domestic secondary battery industry may worsen in the long term. Ahn Hoe-soo, a researcher at Ebest Investment & Securities, explained, “Tesla’s 4680 battery production capacity expansion is progressing faster than that of the Sarba Truck,” adding, “Ultimately, the goal is to reduce the enormous costs paid to cell manufacturers.” It is expected that after Tesla is able to produce 4680 batteries stably, it will try to reduce the profits made by cell manufacturers.
Tesla ELS outstanding balance exceeds KRW 1 trillion… High-value investors are still in the loss zone
Individual investors are also shaking with anxiety. Shareholder reactions in stock discussion rooms generally express disappointment over the weaker rebound than Tesla or concerns that it may only be a flash increase. On the LG Energy Solution community, posts certifying the sale were posted one after another. They added things like, “If given another chance, I will buy,” “If it goes up, I have to sell right away,” and “I’m anxious.” On the other side, shareholders complained, “When prices fall, they are twice as much as Tesla, and when they rise due to events, they are half as expensive as Tesla,” and “Can’t we just keep going up and not move at all?”
It is still too early for investors in equity-linked securities (ELS), which use Tesla stock as an underlying asset, to feel at ease. This is because stock prices have been going downhill ever since they peaked in July of last year. The outstanding balance of Tesla ELS since July of last year, as calculated by the Korea Securities Depository, is 1.13 trillion won. Due to the decline in stock prices, early repayment was not possible and the outstanding balance accumulated.
What is scarier than not being able to repay early is incurring a loss. In general, a price that is 30 to 50% lower than the price of the underlying asset at the time of issuance is set as the ‘knock-in’ price, at which principal loss begins to occur. Tesla’s closing price last night ($162.13) is down 44.73% from its high point ($293.34). Investors who subscribed to ELS with a green-in at a price that has fallen 30% from the initial price near the peak are still concerned about losses. To avoid losses, Tesla stock price must recover to the price at the time of ELS issuance.
Reporter Han Kyung-woo, Hankyung.com case@hankyung.com
