Since the beginning of the year, shares of battery materials company Ecopro have increased by more than 900%, helping former Chairman Lee Dong-chae own nearly 5 billion USD.
According to the Bloomberg Billionaires Index, the former chairman and CEO of battery materials manufacturer Ecopro (South Korea) has increased his fortune by $4.5 billion since the beginning of the year, to $4.9 billion. The reason is that the company's shares have increased by 919%. This is the largest increase in the group of companies with a capitalization of $10 billion or more in the world .
Behind Ecopro’s surge are South Korean retail investors, who are increasingly dominating the country’s stock market. Electric-vehicle-related stocks have become a hot commodity, helping companies that supply materials used in electric vehicles boom this year. Ecopro BM, a subsidiary that supplies cathodes (used in lithium-ion batteries) to customers such as Samsung SDI and SK On, has also surged 227% this year.
Former Ecopro Chairman Lee Dong-chae. Photo: Yonhap
Still, analysts warn that speculative activity by retail investors in the wake of the pandemic could lead to serious losses. "Rechargeable batteries do have great growth potential in the future. But it is unusual for some companies to have such huge stock increases," Park said. He explained that Ecopro's stock has grown rapidly because it is popular with retail investors.
In the second quarter, Ecopro reported a 64% increase in revenue to 2 trillion won from a year earlier. However, operating profit rose less than 1% to 170.3 billion won. Rising metal prices and exchange rate fluctuations have weighed on the company’s profit margins. Ecopro currently relies on Ecopro BM for the bulk of its revenue.
Ecopro shares have soared despite Lee Dong-chae recently being charged with insider trading and serving a two-year prison sentence. He was also fined 2.2 billion won ($1.7 million) for violating securities regulations, raising concerns that Ecopro’s stock growth is unsustainable.
"I think Lee didn't expect the company to grow so fast. Their internal structure may not have caught up with the growth," said Park Ju-gun, director of corporate governance research firm Leaders Index in Seoul.
Lee was born into a poor family in Pohang (North Gyeongsang, South Korea). He studied business administration at a college, worked as an accountant, and opened a fur trading company.
In 1998, he founded Ecopro, inspired by the Kyoto Protocol on reducing greenhouse gas emissions. Initially, he sold only environmentally friendly products. But 20 years ago, Lee switched to selling materials for electric vehicle batteries.
Lee stepped down as CEO in March 2022, following allegations that he and several employees were involved in insider trading. A Supreme Court announcement last month said Lee had traded Ecopro BM shares under another name, making a profit of 1.1 billion won. Lee remains the company's largest shareholder, with a 25% stake both directly and indirectly.
Ha Thu (according to Bloomberg)
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