Strategies for Investing in the Secondary Battery Sector

The secondary battery sector is poised for growth, driven by increased foreign investment and regulatory improvements.

### Strategies in the Secondary Battery Sector
Lee Chang-han from IM Securities emphasizes the importance of **expanding positions in the secondary battery market**, as funds shift from semiconductors and other buyers. The U.S. electric vehicle market is experiencing **significant sales growth**, with a forecasted recovery in sales for next year, leading to **improved sentiment in the battery sector**. The recent resumption of short selling has attracted foreign and institutional investments, with EcoPro BM and LG Energy Solution seeing **notable net purchases from foreign investors**.

### Short-Selling Trends and Stock Rebounds
EcoPro BM has seen a decrease in its short-selling balance and shares held short, while futures have remained stable. Stocks with high short-selling ratios, like LG Solutions, EcoPro, and POSCO Holdings, are experiencing **strong net buying from foreign investors and institutions**. The government's regulatory improvements on short selling are expected to **diminish the core strength of short-selling forces**, potentially leading to **increased funds flowing into these stocks**.

### Changes in Short Selling Regulations and Their Impact
The Financial Supervisory Service introduced a guideline for short selling without borrowing, leading to **significant stock rebounds and increased demand**. A system was implemented to require institutions to **specify the purpose of borrowing stocks for short selling**, aiming to **prevent illegal practices**. Starting March 31, 2024, weight-based and unlimited short selling will be restricted, with the government enforcing **strict penalties for illegal short selling**.

### Market Insights: Phone Sector Shortage and Semiconductor Preferences
The phone sector is expected to face a **serious shortage** in North America next year, while the set-top box market remains **stable**. Duksan Tech is preferred over CAM for semiconductor investments due to its **diverse business and material offerings**. CAM's recent decline is linked to an **issuance issue**, but strong institutional demand for its bond offering indicates **confidence in its success**.

### Strong Growth and Market Position of ES Equipment
ES equipment sales have surged to **57% of the market** in the first half of the year, with projections to reach **700 billion won this year** and over **1 trillion won next year**. The company's experience in large-scale operations and clear cost management has led to a **growing client base** and a target operating profit of **132.5 billion won this year**, with expectations of **exceeding 300 billion won by 2026**. The ES market is experiencing rapid growth, with an annual rate of **72%**, and Tesla's Megapack showing **100% to 200% growth per quarter**, leading to a target price of **41,000 won** for the company's stock.

### Strategies for Investment in the Secondary Battery Sector: Insights from IM Securities
* 📈 Today, we explored successful strategies for investing in the secondary battery sector, highlighting the **importance of understanding market dynamics** before the market opens.
* 🔋 Lee Chang-han, head of the sales department at IM Securities, emphasized the **ongoing competition in the secondary battery market** and the need to **expand positions** despite recent adjustments in the semiconductor sector.
* 🚗 Recent developments, including discussions about Federal Reserve interest rate cuts and the resumption of electric vehicle subsidies in Germany, have positively impacted sentiment in the battery sector, with forecasts indicating **sales growth for electric vehicles next year**.
* 📊 As of September 26, EcoPro BM had a short selling net purchase balance of **7,371**, and stocks like POSCO Future and EcoPro had a short selling ratio of about **4%**, indicating a **significant level of short selling activity**.
* 📉 The recent regulatory changes regarding short selling are expected to **diminish the power of short-selling forces**, with new rules set to **limit unlimited short selling** starting from November and March 2024.
* 🔍 Lee highlighted the importance of stocks like EcoPro BM, LG Energy Solution, and POSCO Future, which are seeing **strong demand from foreign and institutional investors**, suggesting that these stocks could benefit from **improved sector sentiment**.
* 💡 Additionally, Seojin Systems was identified as a top pick, with expectations of **significant growth in the ESS market**, projecting operating profits to **exceed 300 billion won by 2026**.
* 💬 Overall, the discussion underscored the need for investors to **pay attention to key stocks and market trends** within the secondary battery sector for **informed decision-making**.

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