[Click eStock] "LG Energy Solution, Solid Earnings Expected Despite Deteriorating External Environment"

[Asia Economy Reporter Kwon Jae-hee] Samsung Securities on the 25th issued a 'Buy' investment opinion and a target price of 500,000 KRW for LG Energy Solution.

Although there were concerns about consensus downgrades due to the recent deterioration of the external environment, favorable earnings are expected.

LG Energy Solution's operating profit for the first quarter of this year is expected to reach 151 billion KRW, which is in line with the market consensus of 151.2 billion KRW. In particular, despite concerns about consensus downgrades due to recent disruptions in finished car shipments, relatively favorable earnings are anticipated. This is attributed to strong shipments from global leading electric vehicle manufacturers, additional improvements in sales and profitability of cylindrical batteries, and the expansion of battery material price pass-through areas.

By business segment, the small electronics division is expected to record sales of 1.63 trillion KRW and an operating profit of 171.4 billion KRW. The improved profitability of cylindrical batteries, supported by strong sales from global leading electric vehicle manufacturers, is expected to drive earnings.

The automotive battery segment is expected to have sales of 2.43 trillion KRW and an operating profit of 2.4 billion KRW. Although sales decline due to disruptions in finished car shipments is negative, the company is expected to maintain profitability thanks to cost structure improvements from yield enhancements and the expansion of metal price pass-through areas.

The ESS battery segment is expected to record sales of 230 billion KRW and an operating loss of 22.8 billion KRW. This is due to profitability deterioration caused by a slowdown in sales growth.

Researcher Cho Hyun-ryeol of Samsung Securities analyzed, "LG Energy Solution has not only traditional finished car manufacturers but also leading electric vehicle companies as major clients, which will enable it to defend its earnings compared to competitors," adding, "The expansion of battery material price pass-through, which started with cylindrical batteries, is a differentiating point driving profitability improvement."

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