Mixed Fortunes for Secondary Battery Leaders... Samsung SDI Smiles While LG Ensol Cries

LG Energy Solution Drops 18% in the Past Month
Stock Outlook Darkened by Tesla-Related Negative Factors
Foreign Investors Also Switch to 'Sell'
Meanwhile, Foreign Investors Buy Samsung SDI

[Asia Economy Reporter Kwon Jae-hee] The fortunes of LG Energy Solution and Samsung SDI, considered the top two leaders in the secondary battery sector, are diverging. Recently, as secondary battery-related stocks continue to weaken amid forecasts of a slowdown in electric vehicle demand due to the economic downturn, foreign investors have shown contrasting moves in these two stocks. In the securities industry, the outlook for LG Energy Solution's stock price is gloomy due to overhang (potential supply burden and expiration of employee stock ownership plan lock-up), Tesla-related negative factors, and increased short selling, while Samsung SDI is seen as being out of Tesla-related negative impact.

According to the Korea Exchange as of 9:17 a.m. on the 19th, LG Energy Solution was trading at 479,500 KRW, down 1.24% from the previous trading day. At the same time, Samsung SDI recorded 653,000 KRW, down 2.10%. Since December, LG Energy Solution's stock price has fallen 18%, while Samsung SDI's has dropped about 10%.

There are also differences in foreign investors' supply and demand. Foreign investors had maintained a 'buy' rally for LG Energy Solution for 17 consecutive trading days since November 15 but have held a net selling position for four consecutive trading days since the 13th of this month. In contrast, they have been net buyers of Samsung SDI for five consecutive trading days since the 12th of this month.

LG Energy Solution is surrounded by negative factors. The biggest negative factor is 'Tesla.' Tesla is a major customer of LG Energy Solution, and recently there was a warning that Tesla is facing risks of demand slowdown. As news spread that Tesla is showing sluggish performance in the Chinese market and is taking measures such as production cuts and price reductions, it is expected that LG Energy Solution's sales to Tesla will inevitably be hit.

Samsung SDI is analyzed to have little direct connection with Tesla-related concerns. Kim Ji-san, a researcher at Kiwoom Securities, said, "The recent price adjustment in the battery sector stemmed from concerns about Tesla-related Chinese electric vehicle demand and competitor supply and demand worries, but Samsung SDI is less related to these concerns," maintaining a target price of 900,000 KRW and a 'buy' investment rating.

For LG Energy Solution, overhang concerns are also a negative factor. On January 27 next year, about 7.92 million shares (3.39%) of employee stock ownership plan shares are scheduled to have their lock-up period lifted. The current stock price is trading around 470,000 to 480,000 KRW, about 60% higher than the public offering price (300,000 KRW), raising the possibility of a large volume of profit-taking sales. Short selling is also a factor holding back LG Energy Solution's stock price. Since the beginning of this month, the proportion of short selling transactions relative to the total trading volume of LG Energy Solution has been about 20%. In particular, on the 8th, when the stock price plunged more than 5%, the short selling ratio soared to 34.30%.

Joo Min-woo, a researcher at NH Investment & Securities, said, "The rebound momentum for LG Energy Solution will only be confirmed after February to March next year," adding, "The stock price is weak due to reflected concerns about Tesla-related electric vehicle demand slowdown and employee stock ownership plan overhang, and new electric vehicle orders under the U.S. Inflation Reduction Act (IRA) can only be confirmed from mid-first quarter next year at the earliest."

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