Lotte Energy Materials (020150 KP) Buy: 1Q26 review – stronger demand for HVLP foils

Research evidence excerpt

Lotte Energy Materials (020150 KP) Buy: 1Q26 review – stronger demand for HVLP foils

rmance printed circuit boards (PCBs) used in AI data centres (AIDCs) 110000

and network equipment. The company has completed phase 1 (6.7kt/yr) conversion 60000

in May 2026 and is in phase 2 expansion (16kt/yr by 1H27e). With the target of

achieving a c30% global market share, LEM is reviewing phase 3 greenfield 05/25 11/25 05/26

expansion (additional 10kt/yr, requiring capex of cKRW400-500bn) in the upcoming Target price: 95000 High: 78500 Low: 19730 Current: 71400

years. We think LEM’s extensive experience (four decades), track record in PCB Source: LSEG IBES, HSBC estimates

copper foil and relationships with key domestic customers (MOU with Doosan in

March 2026) provide strong support for additional business opportunities. Yushin Park*

Analyst, Korea Industrials & Utilities

Earnings estimate changes: We raise our 2027/2028 OP estimates by TheLimited,HongkongSeoul Securitiesand ShanghaiBranchBanking Corporation

11.9%/11.5%, respectively as we raise our margin assumptions to reflect a higher yushin.park@kr.hsbc.com

+82 2 3706 8756

HVLP proportion, which should be margin accretive. This means our 2027/2028 OP

estimates stand 9.2%/10.6% above the market consensus.

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Maintain Buy, with higher TP of KRW95k (from KRW65k): We continue to use

EV/EBITDA methodology to value the stock. We apply our new target EV/EBITDA

multiple of 29.3x (from 22.0x), derived by using LEM’s average trading multiple in

2H21 to 1H22 during which the company enjoyed a favourable copper price and

shipment volume increases. We apply this multiple to our 2027e EBITDA of