[Click eStock] "LG Chem, Q2 Consensus Expected to Be Exceeded... Target Price Up"

[Asia Economy Reporter Oh Ju-yeon] KB Securities maintains a 'Buy' rating on LG Chem, expecting its Q2 earnings this year to surpass consensus estimates, and has raised the target price by 15.4% from the previous level to 525,000 KRW.

According to KB Securities on the 8th, LG Chem's Q2 sales are expected to be 7.0433 trillion KRW, a 1.9% decrease compared to the same period last year, while operating profit is projected to increase by 32.6% to 354.6 billion KRW, exceeding the market consensus of 304.8 billion KRW.

Researcher Baek Young-chan explained, "The improvement in performance is due to the rise in propylene chain spreads and the growth in scale and profitability of the battery business."

Researcher Baek stated, "The Q2 basic materials segment's sales and operating profit are expected to be 3.1922 trillion KRW and 318.6 billion KRW respectively, down compared to last year but up from the previous quarter," adding, "The price of the raw material naphtha fell by 285 dollars compared to the previous quarter, which is estimated to have expanded product spreads compared to Q1." He also mentioned that Q2 battery business sales and operating profit are expected to exceed initial estimates at 2.8584 trillion KRW and 25.5 billion KRW respectively. It is explained that cylindrical battery sales have significantly increased, and automotive batteries have also grown by 15-20% compared to the previous quarter due to the pre-purchase effect by automakers.

He further noted that the second half of this year will be a crucial turning point for the battery business, anticipating a level-up in LG Chem's stock price.

In particular, a notable change is that the world's largest electric vehicle market has shifted from China to Europe. In Q1, electric vehicle sales in Europe reached 210,000 units, a 76.7% increase year-on-year, while China saw a 58.3% decrease to 100,000 units, completely changing the largest market. LG Chem holds a dominant production capacity in Europe.

Researcher Baek said, "As of the end of 2020, LG Chem's European automotive battery production capacity accounted for 72.7%, demonstrating overwhelming market dominance," and expressed expectations that "LG Chem will become the world's number one automotive battery company (by sales) this year."

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