UBS maintains Buy on Beijing Easpring Material Technology, cuts target price to Rmb72.00

Overview

This report is UBS's earnings review of Beijing Easpring Material Technology (300073.SZ). It notes that FY25 showed a mixed performance: NCM profitability came in below expectations, prompting UBS to cut future earnings estimates and target price; however, the LFP business was supported by higher processing fees, LCO recovered significantly on demand for high-rate and high-voltage products, and new businesses such as solid-state battery materials are also progressing, so UBS maintained its Buy rating.

Core views

UBS's core view is that weaker-than-expected near-term NCM profitability is a drag, but the company's overall profit trajectory still has room to improve. UBS lowered NCM profit forecasts while raising LFP and LCO volume or profitability assumptions. Management remains constructive on 2026 business growth, including NCM sales growth of 40%-50%, potential LFP doubling, partial start-up of the first Finland phase in 2H26 with a target of the first profitable year in 2027, and expansion of solid-state cathode and solid-state electrolyte lines.

Analysis framework

The report mainly uses a combination of segment-level operating assumptions and valuation multiples: it first breaks down volume, ASP, unit gross profit, and profit changes for NCM, LFP, LCO, and other cathode-material businesses, then revises revenue, gross profit, EBIT, net profit, and EPS forecasts accordingly; on valuation, it uses 2026E P/BV as the base and combines 2026-2027E ROE with implied 2027E P/E to derive the target price.

Methodology notes

• Valuation methodsP/BV methodology

  Price-to-book valuation

  UBS set its target price at 2.5x 2026E P/BV, down from 3.0x previously; this multiple corresponds to about 8% ROE in 2026-2027E and implies roughly 26x 2027E PE.

• earnings_revisionsegment-level earnings revision

  Segment-level earnings forecast revision

  The report adjusts volume, ASP, and unit gross profit assumptions separately for NCM, LFP, LCO, and other businesses, then rolls them up into revenue, gross profit, EBIT, net profit, and EPS forecasts.

• risk_statementvaluation and risk statement

  Valuation and risk disclosure

  The report lists industry and company risks such as technological substitution, delayed capacity ramp-up, EV penetration below expectations, metal price volatility, policy risks, and FX risks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 300073.SZ

  covered_company

  Strengths

  Leading high-nickel cathode technology; rising overseas NCM customer mix; improved LFP processing fees; LCO recovery driven by drone demand and high-voltage products; solid-state battery materials offer potential growth optionality.

  Weaknesses

  2025 NCM unit profitability was below expectations; 2026-2028E EPS was cut; expected ROE fell from the prior 11% to 8%; some new projects are still in ramp-up and validation stages.

  Comparison

  Compared with prior forecasts, UBS lowered NCM profitability assumptions but raised LFP profit and LCO volume and profit assumptions; the valuation multiple was reduced from 3.0x 2026E P/BV to 2.5x.

  Risks

  Technological substitution, delayed cathode-material capacity ramp-up, EV penetration below expectations, metal price volatility, policy changes, and FX fluctuations.

Key data

• RatingBuy12-month rating maintained at Buy.
• Target priceRmb72.00Previous Rmb82.00, down 12%.
• EPS forecast revisions2026E -19%, 2027E -23%, 2028E -15%2026E EPS cut from Rmb2.37 to Rmb1.91; 2027E cut from Rmb3.57 to Rmb2.73; 2028E cut from Rmb4.28 to Rmb3.63.
• 2025 NCM shipments55kt, +44% YoYOverseas share rose to 58% from 50% in 2024; shipments were in line with prior guidance.
• NCM unit net profitFull year about Rmb7,000/ton, Q4 about Rmb6,200/tonBelow UBS's prior full-year expectation of about Rmb10,000/ton.
• 2025 LFP shipmentsAbout 92kt, about +60% YoYQ4 unit net profit was about Rmb800/ton, flat QoQ, indicating more stable earnings delivery.
• 2025 LCO shipmentsAbout 5,800 tons, +60% YoYUnit net profit rose from about Rmb7,700/ton to about Rmb17,000/ton.
• 2026E NCM sales guidance+40%-50%Incremental growth is mainly expected from international customers.
• 2026E LFP sales guidancePotentially doublesConstrained by the ramp-up pace of newly built in-house capacity in Panzhihua.
• Finland Phase I project30kt, 70%-80% order coveragePartial start-up is expected in 2H26, with the goal of becoming the first profitable year in 2027.
• Solid-state battery materialsAll-solid-state NCM cathode 2026E shipment guidance above 100 tonsASSB solid electrolyte line planned to expand from 10 tons to 1,000 tons; partial vehicle installation in 2026, scaled demonstration in 2027.

Impact & implications

The investment implication is that the earnings forecast cuts reflect weaker-than-expected near-term profitability quality in the NCM business, but the maintained Buy rating shows UBS places more weight on the company's improved customer mix, LFP and LCO earnings offset, new capacity, and medium-term upside from new technology businesses. The target price cut and multiple compression also suggest the market needs to reassess the pace of ROE recovery.

Risks

• Product and technology substitution risk.
• Delayed ramp-up of cathode-material capacity.
• EV penetration below UBS forecasts.
• Profit and inventory risk from metal price volatility.
• Commodity prices, exchange rates, government EV regulation, and changes in global climate policy may affect industry performance.
• The pace of start-up, customer validation, or profitability realization for the Finland project, solid-state battery materials, and sodium-ion business may fall short of expectations.

What to watch

• Whether 2026 NCM sales can grow by 40%-50% and whether incremental international customer demand materializes.
• Whether NCM unit profitability can recover from the 2025 low.
• Whether higher LFP processing fees translate into stronger unit profit and whether the target of doubling shipments is achieved.
• Whether demand for LCO high-rate and high-voltage products remains strong and unit net profit continues to improve.
• The progress of partial start-up, order coverage, and 2027 profitability targets for the 30kt Finland Phase I project in 2H26.
• Progress on all-solid-state NCM cathodes, ASSB solid electrolyte line expansion, vehicle-installation validation, and scaled demonstration in 2027.
• Whether the sodium-ion business can generate meaningful profits after 2H27.