[Click eStock] LG Energy Solution, Solid Competitive Edge as Pioneer... "Top Pick in Secondary Batteries"

[Asia Economy Reporter Kwon Jae-hee] Meritz Securities on the 9th issued a 'Buy' investment opinion and a target price of 680,000 KRW for LG Energy Solution.

Meritz Securities expects LG Energy Solution's revenue growth to continue in the second quarter. Accordingly, LG Energy Solution is forecasted to maintain profitability similar to the previous quarter (revenue of 4.7 trillion KRW and operating profit of 319.8 billion KRW). Additionally, signs of easing production disruptions among downstream customers are positive. Although cylindrical battery shipments slightly declined month-on-month due to the Shanghai lockdown in China, quarterly shipment volumes continue to show an increasing trend. The annual guidance is also expected to be revised upward.

LG Energy Solution's mid-to-long-term production plan is also optimistic. It has set a production target of 520GW by 2025, and if contracts with new OEMs currently under discussion are finalized, the guidance could be raised. With its supply chain, customers, sound financial structure, and secured listing funds, the company is expected to further strengthen its market dominance.

The premium factors of LG Energy Solution include ▲ partnerships with leading OEMs and ▲ mass production and R&D capabilities accumulated over the past 10 years. Amid the global supply chain restructuring, LG Energy Solution proactively secured production bases in Poland, the United States, and Southeast Asia in that order. The workforce, yield management, and manufacturing cost control capabilities accumulated during the mass production process at these facilities are expected to be transferred as know-how to new facilities, creating a competitive gap with latecomers through future smart factory applications.

Researcher Noh Woo-ho of Meritz Securities said, "LG Energy Solution is not heavily burdened by CAPEX scale under various funding scenarios, including annual operating cash flow and held cash flow," adding, "It is the top pick in secondary battery coverage."

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