[Click eStock] "LG Energy Solution's Growth Slows Due to Semiconductor Shortage... Expecting US Market Growth Next Year"

[Asia Economy Reporter Myunghwan Lee] Daishin Securities announced on the 29th that it expects growth in the U.S. market next year for LG Energy Solution, issuing a new buy rating and a target price of 500,000 KRW.

Daishin Securities projected that the company's sales this year will increase by 10% year-on-year to 19.6 trillion KRW, and operating profit will grow by 44% to 1.1 trillion KRW, indicating a somewhat slowing growth trend. The cause of the slowdown was attributed primarily to vehicle semiconductor supply issues. In particular, European original equipment manufacturers (OEMs) faced difficulties in semiconductor supply, negatively impacting LG Energy Solution, which has a high proportion of electric vehicle battery sales to Europe. Last year, LG Energy Solution's electric vehicle battery sales to Europe accounted for 71%.

Another reason cited was that the production of replacement batteries for General Motors (GM)'s electric vehicle 'Bolt EV' in the U.S. did not contribute to sales. The one-time effect of the 1 trillion KRW settlement from the lawsuit with SK reflected in last year's sales was also mentioned. Researcher Changhyun Jeon of Daishin Securities analyzed, "The ongoing cost pressure due to raw material inflation recently makes it inevitable to lower this year's earnings expectations."

However, Daishin Securities' analysis expects growth in the U.S. market starting next year. LG Energy Solution and GM's joint venture 'Ultium Cells' is preparing to start operations at Ohio Plant 1 (40GWh) and Tennessee Plant 2 (40GWh) next year, which is expected to accelerate U.S. sales. The announced local investment scale of LG Energy Solution in the U.S. so far is 250GWh in batteries, which translates to sales of approximately 30 to 33 trillion KRW.

Based on this, Daishin Securities forecasts the company's 2023 sales to increase by 30% year-on-year to 25.4 trillion KRW, and operating profit to rise by 67% to 1.9 trillion KRW.

Researcher Jeon predicted, "With the Biden administration's strengthened eco-friendly policies and the opening of the U.S. electric vehicle market, LG Energy Solution, which is investing most aggressively locally, is expected to be the biggest beneficiary."

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