The contract with Tesla has turned the top management and co-owners of the Korean company L&F Co into multimillionaires: since the beginning of the year, the paper of the manufacturer of cathodes for electric cars has grown by almost 100%, and since the conclusion of the agreement – by about 82%, Bloomberg notes . For a long time, Tesla bought nickel cathodes through a major partner, L&F Co. – the world famous company LG. However, recently Tesla decided to remove the middleman from the structure of the deal, which led to a sharp increase in shares.
Back on January 2, 2023, the company's shares were trading at 175,000 South Korean won (approximately $132.8), but now the quotes are close to the historical maximum that was set this year. At the end of trading on Tuesday, April 18, the price stopped at 325,000 won, and the recorded high of the day was 344,000 won. The volume of the contract with the American manufacturer is estimated at $2.9 billion. Experts note that it was this cooperation that spurred the growth of the company's quotations.
L&F Co. established relatively recently – in 2000. The company has long been part of a highly diversified conglomerate of LG companies. Moreover, until recently, deliveries to LG accounted for about 80% of the company's revenue, but now this situation is likely to change. The company itself is positive about the prospects, noting that it can begin a big transformation of L&F Co.
“L&F is ready for further growth. Of great importance is the fact that her latest client is the one who leads the market, ”said an analyst at Meritz Securities Co. Wuho Ro.
L&F declined to comment on the current agreement and prospects. The company took up cathodes in 2005, the company's management relied on components for lithium-ion batteries. The biggest increase in sales was recorded during the beginning of the “boom” of electric cars: from 2020 to 2022, sales increased tenfold. True, 80% of the revenue came from the related LG, which in the future could resell them to world markets.
The agreement with Tesla is not the first major attempt by L&F to diversify the company's partners: in 2021, it signed an agreement with the American battery recycling company Redwood Materials, which is headed by former Tesla CTO J.B. Strobel. The company itself expects that by 2025 the share of revenue accounted for by LG will fall to 50%, while Tesla may account for up to 30%.