IBK Investment & Securities has slashed its target price for EcoPro BM (KOSDAQ: 247540) by 48%, from 220,000 won to 115,000 won, while maintaining a "Trading Buy" rating. The broker cited two principal headwinds: the loss of American energy-storage system (ESS) volumes to rivals, and the accelerating adoption of Chinese batteries by European vehicle manufacturers.
Earnings disappoint across the board
EcoPro BM reported second-quarter 2026 revenues of 576.7bn won, down 4.7% from the previous quarter, while operating profit fell 13.9% to 18bn won, leaving an operating margin of 3.1%. Both figures came in well below market consensus — revenue missed by 13.1% and operating profit by 24.0% against expectations of 664bn won and 24bn won respectively.
The sharpest blow came from the ESS segment. As American ESS customers diversified their supply of NCA (nickel-cobalt-aluminium) cathode materials to competing producers, ESS revenues plunged 53.7% quarter-on-quarter to 45bn won. Electric vehicle (xEV) revenues edged up 1.0% to 385bn won, and the non-IT segment — covering power tools and e-bikes — rose 16.0% to 146bn won. Even so, those gains were insufficient to offset the ESS collapse: total cathode shipments fell 9.5% quarter-on-quarter to 15,000 tonnes. Fixed costs from ramping up the Hungarian factory added further pressure on margins.
A difficult third quarter ahead
The outlook for the third quarter (July–September) offers little comfort. IBK Investment & Securities projects revenues of 550bn won (down 4.6% quarter-on-quarter) and operating profit of 12bn won (down 35.8%). Although rising raw-material prices should lift the average selling price by around 5%, shipment volumes are expected to decline a further 10% as European original equipment manufacturers (OEMs) increase their purchases of Chinese-made batteries.
EcoPro BM's exposure to the American market is forecast to shrink from roughly 10% of revenues in the first half of 2026 to below 3% in the second half — meaning that the European market will effectively determine the company's performance for the rest of the year. IBK Investment & Securities stated plainly: "The trajectory of cathode shipments in the second half will be decided by Europe."
Europe: both threat and opportunity
The European competitive landscape is nuanced. Chinese batteries currently account for an average of 75% of procurement by European OEMs — a strikingly high share. Yet a growing push among European manufacturers to reduce their dependence on China could benefit EcoPro BM, which operates a local production facility in Hungary.
IBK Investment & Securities expects EcoPro BM's Hungarian EA1 plant — which has a total annual capacity of 54,000 tonnes across three lines — to bring one line (18,000 tonnes) dedicated to Volkswagen on stream in June, and a second line serving Hyundai Motor Group in September. A third line is being converted from NCA to NCM (nickel-cobalt-manganese) chemistry to attract additional customers, with start-up targeted for the first half of 2027.
Weaker full-year forecasts
Annual shipment volumes are now expected to decline from approximately 70,000 tonnes in 2025 to around 60,000 tonnes in 2026. Full-year revenues are projected at 2.302tn won, a 9.1% drop from 2.532tn won in 2025. Operating profit is forecast at 64bn won, implying a margin of 2.8% — roughly half the 5.6% recorded in 2025.
Valuation offers scant comfort
Investors should weigh several risks carefully. EcoPro BM's shares have already fallen more than 58% from their 52-week high of 246,000 won, trading at 103,500 won as of 31st July. The new target price of 115,000 won implies upside of just 11.1% from current levels, while the implied price-to-earnings ratio for 2026 stands at an eye-watering 465.3 times — a demanding valuation even after such a sharp de-rating.
The broader recovery thesis rests on a key assumption: that Europe's drive to reduce Chinese battery dependence translates into firm orders for EcoPro BM. The benefits from the Hungarian plant's additional converted line are unlikely to materialise in full before the first half of 2027. IBK Investment & Securities projects a sharp improvement in 2027 — revenues of 3.895tn won and operating profit of 160bn won — but these numbers are predicated on European de-Sinicisation becoming a commercial reality. Given Chinese battery makers' formidable cost competitiveness and their own efforts to establish a local European presence, that assumption remains far from certain.