LG EnSol with Passive Fund Inflows, Foreign Firms Issue 'Sell' Reports

CLSA 'Sell' Opinion Leads to 4.8% Intraday Drop

[Asia Economy Reporter Minji Lee] LG Energy Solution, which had shown a rebound due to expectations of passive fund inflows, is faltering following a sell recommendation report from a foreign securities firm early in the trading session.

As of 10:40 a.m. on the 9th, LG Energy Solution's stock price stood at 535,000 KRW, down 1.29% from the previous trading day. Earlier in the session, it had dropped as much as 4.8% to 516,000 KRW. Since its listing on the 27th of last month, LG Energy Solution's stock price had fallen to 440,000 KRW but had rebounded on expectations of passive fund inflows.

The decline is attributed to a sell report issued by Hong Kong-based securities firm CLSA. On this day, CLSA changed its investment opinion on LG Energy Solution to sell while maintaining a target price of 450,000 KRW. This was based on the assessment that the company posted weak results due to semiconductor shortages in Q4 last year and provided conservative growth guidance for this year. The previous day, LG Energy Solution announced Q4 sales of 4.4394 trillion KRW and operating profit of 75.7 billion KRW.

Ken Shin, a CLSA analyst, analyzed, "Sales increased steadily thanks to continuous electric vehicle battery sales, but operating profit margin was lower than expected due to negative impacts from rising raw material prices and automotive chip shortages." He added, "Due to severe semiconductor supply constraints and rising raw material costs, the company has conservatively set a sales guidance of 19.2 trillion KRW for this year."

However, expectations for passive fund inflows have not been completely diluted. Since the total passive fund money that could flow into LG Energy Solution is expected to reach about 2 trillion KRW, it could act as a short-term positive factor. LG Energy Solution is set for early inclusion in the MSCI (Morgan Stanley Capital International) index after market close on the 14th, and early inclusion in the KOSPI 200 index on the 11th of next month.

Analyst Ken Shin stated, "The positive impact from passive fund inflows will continue," and evaluated, "LG Energy Solution is a battery manufacturer with close partnerships with major global automakers, but the current stock price is considered less attractive compared to China's CATL."

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