Expecting a Surprise in Electric Vehicle Demand in the Second Half of the Year...Who Will Benefit?

Mirae Asset Daewoo Picks 'LG Chem, Cheonbo' as Top Picks

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[Asia Economy Reporter Kum Bo-ryeong] Expectations of a demand surprise for electric vehicles in the second half of this year have led to forecasts that LG Chem and Cheonbo will benefit.

According to Mirae Asset Daewoo on the 24th, Tesla's cost competitiveness has significantly improved with the operation of its Chinese factory, allowing it to aggressively lower sales prices. Considering China's subsidies, high brand awareness, and fuel cost savings, sales in China are expected to rapidly increase from mid-year.

Existing automakers are also expected to improve and launch models in response to Tesla's market penetration. Yeonju Park, a researcher at Mirae Asset Daewoo, said, "Volkswagen's ID3 is expected to be quite attractive compared to the internal combustion engine Golf in the same class when subsidies are considered, and the upcoming SUV ID4 is expected to have even better product competitiveness." She added, "Recently, Bloomberg reported that Europe is reviewing electric vehicle support policies as part of economic stimulus measures. Considering the eco-friendly trend and mid- to long-term industrial competitiveness, this trend is likely to continue."

As Tesla leads the market, battery technology innovation is accelerating. This is expected to advance the achievement of economies of scale and the economic viability of electric vehicles.

In this context, Mirae Asset Daewoo selected LG Chem and Cheonbo as top picks for the second half of the year. Researcher Park explained, "LG Chem's premium for growth in the electric vehicle battery sector is expected to expand further. The yield of the European factory is steadily improving, so performance improvement effects are also anticipated." She continued, "Cheonbo's main products, next-generation electrolytes and additives, are materials that help improve battery performance and are expected to grow along with industrial development. Production facilities for battery materials are planned to be expanded fourfold in the fourth quarter compared to the first quarter of this year, so rapid performance growth is expected from the second half of this year through next year."

For LG Chem, operating profit for the second quarter of this year is estimated at 284.1 billion KRW. Researcher Park said, "The chemical spread is more resilient than expected, and the battery sector's deficit is expected to shrink compared to the previous quarter due to increased shipments of cylindrical batteries and higher volumes for electric vehicles." She added, "More meaningful performance improvements are expected in the second half. The yield of the European factory is steadily improving, so the battery sector's performance is expected to turn profitable. As the electric vehicle market grows faster, mid- to long-term growth potential can be strengthened."

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