Battery stocks defy Iran turmoil—can they stage a full comeback?

According to The Financial News, the domestic stock market has slowed amid the situation involving the Islamic Republic of Iran, but rechargeable battery-related stocks remain strong. Some analysts are even calling this a "perfect time to buy." According to the Korea Exchange on the 2nd, the share price of battery materials specialist L&F surged 9.63% from the previous trading day to close at 161,600 won. After a speech by U.S. President Donald Trump that day, the broader market plunged and the Stock Market Division of the Korea Exchange and KOSDAQ both triggered sidecar trading curbs, yet L&F continued to extend its gains.
L&F, which is about to begin mass production of lithium iron phosphate (LFP) battery cathode materials essential for this year’s Energy Storage System (ESS) business, has been breaking out of its loss-making cycle since last year and is now firmly on a turnaround track. This is largely because it is well positioned to benefit from expanding Electric Vehicle (EV) sales and from supply chain diversification away from China, particularly in the United States and Europe.
Brokerages are also expressing optimism. Daol Investment & Securities raised its target price for L&F the previous day from 130,000 won to 180,000 won. Jiwoong Yoo, an analyst at Daol Investment & Securities, noted, "The EV market has been showing signs of recovery since the beginning of the year, and new revenue from ESS is expected to start contributing from the third quarter of this year." He added, "Starting with the first quarter of this year, the company has entered an earnings improvement cycle accompanied by a rebound in top-line growth."
On the same day, major battery makers also finished higher, including POSCO Future M (up 0.71%), Samsung SDI (up 2.55%), and SK Innovation (up 0.87%). In addition, most companies in the broader battery value chain have continued to see their share prices rise despite the impact of the conflict.
In the securities industry, there is growing talk that rechargeable battery stocks may have already bottomed out in the first quarter and could now be poised for a rebound.
Min-woo Ju, an analyst at NH Investment & Securities, said, "Expectations that rechargeable battery makers will hit the bottom of their earnings with first-quarter results will grow stronger," adding, "In the first half, we expect a rebound reflecting the earnings trough, and in the second half, a rally driven by policy expectations."
Ju projected that, among the companies under his coverage, overall first-quarter results would be solid, with the exception of POSCO Future M, SKIET, and Dongwha Enterprise. He highlighted the possibility of an earnings surprise at L&F in particular. He forecast that for most rechargeable battery companies, the first quarter would mark the low point for full-year earnings, followed by quarter-on-quarter profit improvement for the rest of the year.
This outlook also reflects the view that expectations for green policies in the United States could rise again ahead of the November midterm elections. According to NH Investment & Securities, prediction market platform Polymarket currently puts the Democratic Party of the United States (Democratic Party)’s chances of winning the House at 84%, and its chances of winning the Senate at around 49–51%. If the Democratic Party prevails, the likelihood of a renewed push for pro-environment policies in the U.S. increases.
Shifts in policy in Europe are also seen as a positive factor. Experts say that with the official legislative proposal of the Industrial Acceleration Act (IAA), the potential for Korean materials companies to benefit indirectly has grown.
Lee Hyun-uk, an analyst at IBK Securities, assessed that a boom in the North American ESS market and a recovery in EV demand are becoming more visible. He said, "The draft of Europe’s IAA released last month is more favorable to Korea than to China, so Korean battery makers are expected to benefit in the European market as well."

fair@fnnews.com Han Young-joon Reporter