Foreign Investors Buying LG Chem Despite Stock Volatility

Despite Fragmentation Noise and Volatile Stock Prices, Strong 2021 Earnings Expectations Remain
Global No.1 Competitiveness Highlighted Amid Surging Electric Vehicle Demand

[Asia Economy Reporter Minwoo Lee] Foreign investors have been steadily buying LG Chem shares. This appears to be based on the analysis that the competitiveness of the world's top-ranked automotive battery sector will grow even further.

According to the Korea Exchange on the 4th, foreign investors net purchased LG Chem shares worth 167.4 billion KRW the previous day. This is the largest single-day net purchase this year. The buying trend by foreign investors began in mid-September. Since September 14, except for only four trading days, they have recorded net purchases every day. During this period, they bought a total of 1.6219 trillion KRW worth of LG Chem shares. The net purchase volume during the same period ranks overwhelmingly first. It is twice the amount of SK Hynix (816.9 billion KRW), ranked second, and 4.7 times that of NAVER (345.3 billion KRW), ranked third. Samsung SDI, which is also grouped as a secondary battery theme stock, recorded net purchases of only 313.5 billion KRW. Despite fluctuations in LG Chem's stock price from the 700,000 KRW range down to the low 600,000 KRW range during this period, foreign investors continued to buy steadily.

This is interpreted as a judgment that LG Chem, evaluated as the world's number one in automotive battery production capacity and sales this year, can achieve significant growth next year as well. According to market research firm SNE Research, LG Chem recorded 15.9 gigawatt-hours (GWh) of battery usage installed in electric vehicles sold worldwide from January to August this year, capturing a 24.6% market share and ranking first globally. Powered by this, the battery business, which succeeded in turning a profit in the second quarter, set new records for both sales and operating profit in the third quarter. Sales reached 3.1439 trillion KRW and operating profit was 168.8 billion KRW due to expanded supply of automotive and small batteries.

On the 30th of last month, LG Chem launched "LG Energy Solution (tentative name)" by spinning off its battery business division through a shareholders' meeting, and it is expected to accelerate business expansion. Although the National Pension Service and individual investors opposed the spin-off at the shareholders' meeting, the proposal passed smoothly with support from institutional investors and foreign investors. The spin-off company, a 100% subsidiary of LG Chem, is expected to speed up the battery business, and with the increase in electric vehicle adoption driven by stricter emission regulations in Europe, future performance is anticipated to improve significantly.

KB Securities forecasted that LG Chem will record sales of 18.0877 trillion KRW and operating profit of 1.1251 trillion KRW in the battery business next year. This represents an increase of 47.8% and 111.6%, respectively, compared to this year. Baek Young-chan, a researcher at KB Securities, explained, "While the demand for automotive batteries increased by only 11.0% year-on-year this year due to the impact of COVID-19, demand is expected to grow significantly next year as electric vehicle adoption accelerates," adding, "LG Chem's number one premium will be further strengthened."

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