Korea Stock Market Insights

Tag: Functional Film

  • Kosmo New Materials (005070) H1 2025 Earnings Analysis: Hidden Opportunities Amidst Battery Sector Slump?

    1. Kosmo New Materials H1 2025 Performance: Red Flags in the Battery Business

    Kosmo New Materials reported KRW 234.008 billion in revenue for H1 2025, a 58.9% decrease year-over-year. Operating profit and net income also plummeted by 93.7% and 76.2% respectively, painting a grim picture of the company’s performance. The sharp decline in sales and low operating rates within the secondary battery cathode materials division are identified as the primary causes. The functional films and toner segments also experienced revenue declines due to sluggish IT demand and the ongoing digital transition. Preliminary earnings further missed market expectations, clouding the short-term outlook.

    2. What Went Wrong? – Battery Market Slump and Intensified Competition

    The overall slowdown in the secondary battery market, coupled with inventory adjustments and intensified competition, dealt a significant blow to Kosmo’s battery materials business. Low operating rates exacerbated the situation by increasing fixed cost burdens and further eroding profitability. The functional films segment also suffered from the ripple effects of declining demand in the upstream IT device market.

    3. What’s Next? – Short-Term Uncertainty, Long-Term Opportunities

    A slow recovery in the battery market is anticipated in the short term, making a swift turnaround for Kosmo unlikely. However, the long-term outlook remains positive, with the expected growth of the electric vehicle market driving increased demand for secondary battery cathode materials. Specifically, if Kosmo’s Mid-Ni and High-Ni cathode materials under development achieve market success, they could provide a new growth engine. The growth potential of the functional film business, spurred by the expansion of the AI market, also presents a positive factor.

    4. Investor Action Plan – Short-Term Caution, Long-Term Consideration of DCA

    • Short-term investors: A cautious approach is recommended until the uncertainties surrounding the battery sector subside. Closely monitor the growth momentum of the functional film business and any signs of recovery in the battery segment.
    • Long-term investors: Focus on the long-term growth potential linked to the expanding EV market, and consider a dollar-cost averaging (DCA) strategy. Continuous monitoring of Kosmo’s technological advancements and client acquisition progress is crucial.
    Q: What are Kosmo New Materials’ primary business segments?

    A: Kosmo New Materials manufactures secondary battery cathode materials, functional films (MLCC release films), and toner.

    Q: What are the main reasons for Kosmo New Materials’ weak H1 2025 performance?

    A: The significant decline in sales and low operating rates in the secondary battery cathode materials segment are the main reasons. These were impacted by a slowdown in downstream demand, inventory adjustments, and increased competition.

    Q: What is the outlook for Kosmo New Materials?

    A: While short-term uncertainties persist due to the battery market, the long-term outlook appears positive, with a potential recovery linked to the growth of the EV market. The growth potential of the functional film business is also a positive factor.

  • Kosmo Advanced Materials Q2 2025 Earnings Shock: 77% Operating Profit Plunge – Causes and Outlook

    1. What Happened in Kosmo’s Q2 Earnings?

    Kosmo Advanced Materials reported KRW 120.1 billion in revenue, KRW 500 million in operating profit, and KRW 2.3 billion in net profit for Q2 2025. While revenue saw a slight increase from the previous quarter, operating profit plummeted by a concerning 77%. Net profit saw a minor increase due to non-operating factors, but this doesn’t mask the underlying weakness in core business segments.

    2. Why the Significant Decline?

    The primary drivers of this underperformance are the struggles in the secondary battery cathode materials and functional film segments.

    • Secondary Battery: While production volume decline showed some recovery, profitability suffered due to weak order intake and rising raw material costs.
    • Functional Film: Despite the long-term potential of the AI market, near-term demand weakness continues to impact this segment.

    External factors, such as global economic slowdown concerns impacting EV and IT device demand and rising crude oil prices affecting raw material costs, also played a role.

    3. What’s the Outlook?

    The future performance of Kosmo Advanced Materials hinges on the success of its order acquisition strategy, the stabilization of raw material prices, and the overall global economic recovery. Addressing the low capacity utilization rate in the secondary battery segment, despite increased production capacity, is crucial.

    4. What Should Investors Do?

    Despite the short-term challenges, the long-term growth potential of the secondary battery and AI markets should not be ignored. Investors should carefully review the final earnings report and analyze the company’s order book, future strategies, raw material price risk management, and competitor landscape before making investment decisions.

    Frequently Asked Questions

    Q: What are the key reasons for Kosmo Advanced Materials’ poor Q2 performance?

    A: The main factors are weak order intake and rising raw material costs in the secondary battery cathode materials and functional film segments, coupled with slowing demand due to global economic concerns.

    Q: What is the outlook for Kosmo Advanced Materials?

    A: While the long-term growth potential in the secondary battery and AI markets remains, short-term headwinds are likely to persist. The company’s success in securing orders, managing costs, and the pace of global economic recovery will be key determinants of future performance.

    Q: What should investors consider?

    A: Investors should carefully examine the final earnings report, analyze the company’s order book and strategies, monitor raw material price trends, and assess the competitive landscape before making any investment decisions.