LG Chem · LG Energy Solution 2Quarterly recovery expectations and demand for Korean batteries

Securities analysts forecast that LG Chem will post “surprise results” in the 2quarter on a recovery in its battery and chemical divisions and have raised its target price. The forecast was presented at the beginning of 6. According to securities-industry analysis, the basis was a recovery in battery demand and improved prices for chemical products.

Reports said that dependence on China is declining as the EU’s Industrial Acceleration Act enters full implementation. Against this backdrop, the possibility has been raised that 45% of European automakers’ volume could go to Korean batteries. The report cited this as a background factor behind increased demand for Korean batteries.

LG Energy Solution was expected to return to profitability in the 2quarter. Some securities firms accordingly raised their target prices for LG Energy Solution. The report also mentioned an increase in ESS orders.

The increase in ESS orders was linked to expectations of a long-term improvement in profitability. The report forecast that free cash flow would turn positive next year on the back of this trend. The expansion of ESS and European volumes was cited as the main basis.

Several reports presented this trend as a sign of recovery across the South Korean battery industry. Specifically, LG Energy Solution and LG Chem were mentioned as potential beneficiaries. Securities firms said it would be necessary to verify the performance and guidance of the companies concerned.

These announcements and forecasts6were concentrated at the beginning of the month. Reports2identified quarterly earnings releases and disclosures of ESS orders as the next points to monitor. Battery operating profit and order details are important in each company’s disclosures and earnings releases.