[Click eStock] "LG Chem, Q1 Will Be the Bottom"

Mirae Asset Daewoo, Investment Opinion 'Buy' and Target Price of 500,000 KRW Presented... Closing Price on 3rd at 350,000 KRW

[Asia Economy Reporter Geum Bo-ryeong] LG Chem is expected to use the first quarter of this year as a bottom.

According to Mirae Asset Daewoo on the 4th, LG Chem's operating performance in the fourth quarter of last year recorded an operating loss of 27.5 billion KRW, falling short of consensus. This was due to a one-time cost of about 300 billion KRW related to ESS.

Yeonju Park, a researcher at Mirae Asset Daewoo, said, "LG Chem's stock price has recently risen somewhat thanks to Tesla's stock price increase, but the battery sector is still undervalued, and a re-rating is expected to begin in earnest." She explained, "The reason Tesla's stock price rose is that Tesla's electric vehicles are selling very well in Europe and other regions, and this year, with the Model Y and the operation of the China factory, its competitiveness is expected to be further strengthened. This ultimately means that existing automakers' electric vehicle strategies will inevitably accelerate."

Due to high entry barriers, the position of leading battery companies is being strengthened. In China as well, the market share of the top company, CATL, continues to expand. Batteries are an industry that requires a high level of chemical technology and long-term mass production experience.

Although LG Chem's operating profit for the first quarter is expected to be sluggish at 66 billion KRW, quarterly improvement is anticipated. Researcher Park said, "The first quarter results are expected to be poor, especially as the chemical spread has significantly slowed and the novel coronavirus has overlapped, causing some production disruptions, leading to a significant decline in chemical sector performance. The battery sector is also expected to see an expanded related deficit in the first quarter as new lines in Europe begin operation." She added, "However, in the chemical sector, if there are no one-time factors, it is expected to achieve mid-single-digit profitability even under current market conditions, and the battery sector's yield is expected to recover in the second quarter, gradually improving performance. Therefore, the first quarter is expected to be the bottom, with quarterly performance improving thereafter."

Mirae Asset Daewoo gave LG Chem a 'Buy' investment rating. The target price was raised from the previous 460,000 KRW to 500,000 KRW. The closing price on the 3rd was 350,000 KRW.

This content was produced with the assistance of AI translation services.