Kwon Young-soo, CEO of LGES, "Will Quickly Catch Up to China's CATL Market Cap... LG Chem Stock Price Also Expected to Recover"

"Considering Competitiveness, Current Market Cap Difference Is Abnormal"
"LG Chem Will Also Return to Stock Price Reflecting LGES Equity Value"

Vice Chairman Kwon Young-soo of LG Energy Solution (center) and key executives are holding an online press conference at the LG Energy Solution headquarters in Yeouido, Yeongdeungpo-gu, Seoul. (Provided by LG Energy Solution)

[Asia Economy Reporter Minwoo Lee] Kwon Young-soo, CEO of LG Energy Solution, expressed confidence in the stock price increase following the company's IPO. He stated that LG Energy Solution can easily catch up with its competitor, China’s CATL, whose market capitalization is more than three times larger based on the upper limit of the IPO price range. He also emphasized that the LG Chem stock price, which plunged after LG Energy Solution was spun off and lost its 'leader in secondary batteries' premium, will recover in the future. Since LG Chem will still hold more than 80% of LG Energy Solution’s shares after the IPO, the company’s true value will be realized.

On the afternoon of the 10th, Kwon Young-soo, CEO (Vice Chairman) of LG Energy Solution, held an online press conference at the company’s headquarters in Yeouido, Yeongdeungpo-gu, Seoul, emphasizing this point. He believes that the current market capitalization gap will naturally be closed since the competitiveness gap between LG Energy Solution and CATL is not significant.

As of November last year, LG Energy Solution ranked second in the world with a 20.5% share of secondary batteries used in electric vehicles, following China’s CATL at 31.8%. However, the market capitalization gap is substantial. Based on the upper limit of the IPO price, LG Energy Solution’s market capitalization is estimated at about KRW 70.2 trillion, making it the second largest in the domestic stock market. In contrast, China’s CATL has a market capitalization of 1.2515 trillion yuan (approximately KRW 235.3 trillion), about 3.4 times that of LG Energy Solution.

CEO Kwon argued that LG Energy Solution has various strengths that CATL does not possess, so it can sufficiently close the market capitalization gap. Considering corporate competitiveness, he views the current market cap difference as somewhat inexplicable. He said, "CATL has easily increased sales because Chinese automakers do not use external batteries but rely on domestically produced batteries. However, to become a global company in the future, CATL must secure customers in Europe and the U.S., which will not be easy. LG Energy Solution holds advantages in various materials such as cathode materials, has secured global customers that CATL does not have, and has production bases in Europe, the U.S., and China, as well as numerous patents (IP)."

He also shared the same view regarding the recent sharp decline in LG Chem’s stock price. CEO Kwon explained, "Even though LG Energy Solution is listed and receives investments from institutions and individuals, LG Chem still holds 82% of LG Energy Solution’s shares. Based on the upper limit of the IPO price, this corresponds to a value of KRW 60 trillion, but LG Chem’s current market capitalization is in the KRW 50 trillion range, which is excessively undervalued and will soon find its proper value."

Since last year, LG Chem’s stock price has plunged as the IPO of LG Energy Solution following the spin-off became concrete. On January 14 last year, the premium for the secondary battery leader peaked, reaching an all-time high of KRW 1,050,000, but on the last trading day of last year, December 30, it dropped sharply by about 41.4% to KRW 615,000. This led to significant dissatisfaction among individual investors regarding the spin-off itself.

Meanwhile, CEO Kwon also revealed various expansion plans. Discussions are underway regarding the establishment of additional production plants in Europe, considering various forms such as joint ventures (JV) or wholly owned factories. He disclosed that active efforts are being made to enter the Chinese market, with plans to start business with one Chinese company from this year. He emphasized, "China will become the world’s largest electric vehicle market, so it is a place we cannot afford to miss. Since we have had good relationships in the past, we will steadily pursue entry and there will definitely be opportunities." He also mentioned plans to jointly secure raw materials with POSCO.

Meanwhile, LG Energy Solution submitted its securities registration statement to the Financial Services Commission earlier last month and officially began the IPO process. The total number of shares to be offered is 42.5 million, with a desired IPO price range of KRW 257,000 to KRW 300,000 per share.

After finalizing the IPO price based on demand forecasting results on the 14th of this month, the company will conduct a public subscription for general investors from the 18th to the 19th. The final listing on the KOSPI market is scheduled for the end of this month.

The lead underwriters are KB Securities and Morgan Stanley International Securities. Joint underwriters include Daishin Securities, Shinhan Investment Corp., Goldman Sachs Securities, Merrill Lynch International LLC Securities, and Citigroup Global Markets Securities. Mirae Asset Securities, Shin Young Securities, Hana Financial Investment, and Hi Investment & Securities are participating as underwriting companies.

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