Electric Vehicle Battery Stocks Continue to Surge

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] The stock prices of electric vehicle (EV) battery companies are showing an unrelenting upward trend. The high growth potential of the EV market remains strong, and the fact that domestic companies are leading the market share competition against overseas firms in the global EV battery market seems to be stimulating investor sentiment.

According to the Korea Exchange on the 22nd, LG Chem's stock price closed at 512,000 KRW on the 19th, up 4.28% (21,000 KRW) from the previous trading day. LG Chem has surged 31.1% this month alone, continuing an explosive rise of 122.6% since the March low. During the same period, Samsung SDI also showed strong gains, rising 7.2% and 110.4%. Foreign investors have led the stock price rally of these companies, purchasing 207.4 billion KRW worth of Samsung SDI shares and 111.7 billion KRW worth of LG Chem shares over the past two weeks (10 trading days). These purchases ranked first and third in net buying during this period.

With continuous daily stock price increases, the market capitalization size and ranking have also rapidly risen. LG Chem, which was ranked 9th in market capitalization at the end of last year (22.413 trillion KRW), increased its market cap by nearly 14 trillion KRW as of the closing price on the 19th, rising to 6th place (36.1432 trillion KRW). Samsung SDI, ranked 19th (16.2284 trillion KRW) during the same period, climbed more than ten spots in about six months to 7th place (26.4743 trillion KRW).

Despite the impact of the novel coronavirus disease (COVID-19), there is no disagreement on the long-term demand outlook, and the relatively strong performance of domestic battery companies in increasing their global market share has sustained the stock price rise. In particular, while Chinese battery companies, which have a high domestic market share, suffered significant setbacks due to the stagnation of the Chinese EV market, domestic companies maintained growth as their supply chains were diversified, with LG Chem supplying Tesla Model 3, among others.

According to SNE Research, in the global EV battery market share from January to April this year, LG Chem ranked first (25.5%), Samsung SDI fifth (5.6%), and SK Innovation seventh (4.2%). The combined global market share of the three domestic companies this year reached 35.3%, more than doubling from last year's 15.8%, surpassing competitors within the top 10, including China at 34.2% (5 companies) and Japan at 25.1% (2 companies).

Earlier, the European Union announced an EV support policy that includes approximately 20 billion euros in support over two years through the establishment of an integrated EV purchasing agency and about 60 billion euros in support for EV production expansion. Researcher Soonhak Lee of Hanwha Investment & Securities noted, “Attention should be paid to Europe’s COVID-19 response stimulus plan, which is important for domestic battery companies,” and predicted, “In the second half of the year, policy support will accelerate the recovery of EV sales in Europe.”

Performance forecasts are also positive. Although second-quarter sales are expected to stagnate, annual performance is projected to grow compared to last year. According to financial information provider FnGuide, LG Chem’s second-quarter sales are estimated at 7.2057 trillion KRW, a modest 0.39% increase year-on-year. However, annual sales are expected to rise 8.2% to 30.9847 trillion KRW, and operating profit is forecast to grow 56.9% to 1.4048 trillion KRW.

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