Cosmo Advanced Materials (KOSPI: 005070) reported an operating profit of 4.7 billion won for the second quarter, more than doubling the market consensus estimate of 2.2 billion won. Revenue rose 15% year on year to 137.7 billion won.
SK Securities resumed coverage of the company on the 23rd with a buy recommendation and a target price of 48,000 won — implying upside of 34.5% from the current share price of 35,700 won.
The standout performer was the functional films division, which produces materials used in MLCCs (multilayer ceramic capacitors, the miniature components that regulate electrical current in electronic devices). Estimated revenue by segment for the quarter was 88.7 billion won from cathode materials, 46.1 billion won from films, and 2.9 billion won from toner.
SK Securities projects full-year operating profit of 21.2 billion won, a 790% increase on the prior year. Functional film revenue is forecast to reach 188.7 billion won in 2026, representing 64% year-on-year growth. The broker attributes this to robust orders for MLCC release films — a product used in the manufacturing process of these capacitors — underpinned by buoyant conditions in AI and semiconductors, as well as a favourable shift in product mix towards higher-specification goods.
The cathode materials business, which supplies battery manufacturers, is expected to remain loss-making this year, though SK Securities views the trajectory as one of recovery. Management has set a target of returning the division to profit in the fourth quarter. Looking further ahead, the broker forecasts operating profit of 60.8 billion won in 2027, up 187% with an operating margin of 7%, and identifies that year as the point at which cathode materials reasserts itself as the primary earnings driver.
The target price was derived by applying a price-to-earnings multiple of 20 times — in line with IT hardware growth stocks — to estimated 2028 earnings per share of 2,391 won.