SOUTH KOREA FIRST TO MARKET

Research evidence excerpt

SOUTH KOREA FIRST TO MARKET

Stanley Yang AC Asia Pacific Equity Research

(82-2) 758-5712 31 July 2026 J P M O R G A N

stanley.yang@jpmorgan.com

2Q OP in-line; concerns about the earnings trajectory; stay Underweight

PFM’s 2Q OP was broadly in line with JPMe/BBGe, as oil-linked Basic Industry Materials upside offset softer Battery Materials

(cathode/anode). Management expects 2H cathode volumes to improve as deferred volumes return, SDI-bound NCA demand

for ESS/powertools stays resilient, and portable battery demand to non-captive customers strengthens; initial LFP cathode

entry is guided for late 2026, with the CNGR JV starting up in 2027. We are more cautious on the earnings trajectory: volumes

may rise, but margins could remain muted amid intensifying competition (Ecopro BM in SDI-bound ESS/powertool cathodes)

and likely lower-margin portable battery customers, while LFP visibility is limited without an anchor contract. Given tighter risk

appetite, we reduce our valuation to 25x down-cycle EV/EBITDA (from 40x) and our Dec-27 PT (extended from Dec-26) thus

falls to W100,000. Reiterate Underweight.

Samsung Electronics (Jay Kwon) (005930 KS, OW)

Process of rewinding the unwind

We came back with a positive impression from the management 2Q26 result call today: clear LTA communication and

confidence in HBM/Foundry execution improvement alongside bullish outlook view delivery. While the lack of a capital return

announcement was a slight disappointment, we believe the Samsung team will soon be ready to release the necessary plan

(next key catalyst) to the market for shareholder value maximization. Key underlying trends are unchanged (e.g. solid AI capex

from key CSP customers and robust token consumption from agentic AI) and we see few signs of fundamental cracks that