iM Securities advised on the 24th to approach from a conservative perspective, saying that Solus Advanced Materials continues to face substantial losses. iM Securities maintains a 'neutral (Hold)' investment opinion on Solus Advanced Materials and has lowered the target price to 10,000 won.
Solus Advanced Materials recorded 143.9 billion won in revenue and an operating loss of 15 billion won in the second quarter of this year (April to June). The scale of the operating loss was similar to that of the first quarter (January to March), but the institutional sector of the battery foil saw shipments decrease by about 22% due to adjustments in customer volumes.
Jung Won-seok, a researcher at iM Securities, noted, "The tariffs and tax cuts implemented by the Donald Trump administration are expected to accelerate the slowdown in electric vehicle demand in the United States" and added, "It seems difficult to expect performance improvements in the second half of the year."
During the conference call announcing the Q2 management results, Solus Advanced Materials officially confirmed the sale of its copper foil sector, one of its existing core businesses. The strategy is to secure funding to invest in the battery foil business and to focus on areas with greater medium to long-term growth potential.
Jung said, however, "Solus Advanced Materials’ copper foil business supplies high value-added products such as ultra-thin copper foil for AI accelerators used by the world's number one AI semiconductor company and ultra-thin foil for memory semiconductors," adding that they have secured high technical competitiveness and differentiation in the global market.
He further stated, "The copper foil business has played a role in supporting the stock price of Solus Advanced Materials despite the prolonged large-scale losses in the battery foil business," and he noted, "Although it is a strategic choice, if the copper foil business is sold, the valuation burden will increase, leading to adjustments."
Jung mentioned, "Starting from the fourth quarter of this year, product shipments are expected to intensify from new clients such as CATL, which is operating a battery plant in Europe," but he added, "There is still uncertainty about the U.S. and European electric vehicle markets, and if the sale of the copper foil business becomes visible, stock price adjustments are inevitable, so a conservative perspective is needed for the time being."