LG Chem Anticipated to Reign as Battery King for the Next 3 Years... Expectations High

[Asia Economy Reporter Park Soyeon] LG Chem is expected to experience the largest growth in both scale and profitability among global battery companies over the next three years.

On the 24th, KB Securities analyst Baek Young-chan stated in an analysis report on LG Chem, "LG Chem is expected to have the largest growth in sales and profits over the next three years," adding, "This is because the growth of electric vehicles in China is slowing down, high growth is expected in Europe, and LG Chem supplies more than 70% of automotive batteries in Europe."

The market capitalization of LG Chem and CATL is approximately 24 trillion KRW and 52 trillion KRW, respectively. The market capitalization of Chinese battery company CATL is 116.7% larger than that of LG Chem. Since its listing in 2018, the rise in CATL's stock price is believed to have been significantly influenced by net purchases from foreign investors.

CATL's differentiated stock price increase was due to the largest growth in scale and profitability among global battery companies from 2015 to 2019.

Analyst Baek Young-chan said, "The situation will change from 2020," and added, "Over the next two years (2021?2022), LG Chem's battery business sales and operating profit growth rates are expected to be 37.7% and 59.9%, respectively, significantly surpassing CATL's growth rates during the same period."

He cited the background of LG Chem's high growth as the expansion of electric vehicle sales due to strengthened European fuel efficiency regulations, securing a European customer base through proactive investments, and delays in European investments by competing companies.

LG Chem's European battery plant investments began in 2017, and by the end of 2020, battery production capacity is estimated at 60GWh. However, investments by competing companies are minimal. Japanese Panasonic and Chinese BYD have no concrete European investment plans yet.

Only CATL is completing a 15GWh plant in Hanover, Germany, in the second half of 2021. Analyst Baek said, "From the perspective of CATL and BYD, the biggest beneficiaries of the past largest electric vehicle market, China, it seems they have been lukewarm about overseas expansion," adding, "Ultimately, through proactive and bold investments, LG Chem's battery business performance is expected to expand the most among global battery companies."

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