DEEP RESEARCH · L&F

L&F: Battery Value-Chain Reset and the Post-Tesla Contract Inflection

A combined review of high-nickel NCMA95, mid-nickel, LFP, balance-sheet pressure, and the Tesla direct-supply reset.

Published: 2025-12-31 · Battery materials/cathode analysis · Naver Blog

0. Bottom line first

1. Business structure and governance

Official fact: L&F was founded in 2000, pivoted from LCD backlight units to cathode active materials, is headquartered at 11 Igokdong-ro, Dalseo-gu, Daegu, and transferred from KOSDAQ to KOSPI on January 29, 2024. As of September 30, 2025, it was classified as a mid-sized company, not a venture company, and the source cites BB+ ratings from Korea Ratings Data and NICE Investors Service.

Official fact: At the end of Q3 2025, shares outstanding were 36,316,174 and capital was about KRW 18.1B. Saeronics was the largest shareholder with 14.43%, and treasury shares were 7.54%.

Interpretation: Saeronics’ participation in BW subscription and share-backed borrowing can signal confidence in future growth, but margin-call risk should be monitored if the share price weakens.

2. Q3 2025 financials: quality of the turnaround

Interpretation: The KRW 23.4B reversal is accounting-related, but even excluding it, core profitability appears to have moved close to breakeven. The turnaround matters because it confirms utilization recovery and product-mix improvement.

3. Balance sheet and cash flow: liquidity improved, leverage remains

Official fact: Cumulative operating cash flow was -KRW 8.6B, worse than KRW 216.6B a year earlier. Non-cash items included KRW 25.1B of inventory valuation loss and KRW 64.0B of depreciation. Investing cash outflow was KRW 89.1B, with PP&E purchases of KRW 73.5B versus KRW 181.8B a year earlier. Financing cash flow was a KRW 137.5B inflow, including KRW 297.5B of BW issuance and KRW 100.0B of CB issuance.

Interpretation: L&F defended liquidity proactively, but interest expense and dilution risk remain. From 2026 onward, new-line utilization and orders need to justify the cost of financing.

4. CAPA and product roadmap

Official fact: Key sites include the Daegu Dalseo headquarters/Plant 1, Waegwan Plant 2 in Chilgok, and Guji Plants 1, 2, and 3 in Daegu National Industrial Complex. At the end of Q3 2025, PP&E book value was KRW 1.2666T, with machinery KRW 470.0B, land KRW 108.3B, buildings KRW 393.2B, and construction-in-progress KRW 136.6B.

Exact utilization is not disclosed, but the source says management indicated utilization had recovered to the breakeven level. Given utilization was below 50% in 2024, the source estimates Q3 2025 utilization normalized to around 60~70%.

Official fact: The LFP line at Guji Plant 3 is being built with annual capacity of 30,000 tons, with mass production targeted for Q3 2026 and a later expansion plan to 60,000 tons. Precursor internalization through JH Chemical is described as a core response to IRA and other supply-chain rules.

5. Tesla contract reduction: less current revenue loss, more lost future optionality

Official fact: On December 29, 2025, L&F revised the value of the high-nickel cathode supply contract signed with Tesla in February 2023 from KRW 3.8347T to KRW 9.73M. The source interprets this as a 99.99% reduction and effectively a contract termination.

The source attributes the change to delays in Tesla’s 4680 cylindrical battery mass production, yield and process challenges, weak Cybertruck sales, and policy uncertainty such as the potential repeal of EV subsidies under the Trump administration. However, actual 2024~2025 revenue from the contract was presented as less than KRW 10M, so current cash-flow damage is viewed as limited.

Interpretation: This is less a collapse in earnings estimates and more a removal of future multiple support. The core pipeline is not direct Tesla supply but indirect supply to models such as Model 3/Y through LG Energy Solution; the source says LGES-bound NCMA95 shipments are increasing.

6. R&D and post-2026 checkpoints

The source defines 2025 as a year of restructuring. Q3 profit was helped by raw-material rebound and FX, but it also reflected utilization recovery and NCMA95 adoption. From 2026 onward, the core checkpoints are successful LFP mass production, maintaining the NCMA95 quality gap, and proving customer diversification in numbers.