[Click eStock] "LG EnSol, 3Q Profitability Improvement Expected"

On the 10th, LG Energy Solution headquarters on Yeouidaero, Yeongdeungpo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Meritz Securities on the 18th expected LG Energy Solution (LG EnSol) to show improved profitability in the third quarter compared to the previous quarter. Accordingly, it maintained a 'Buy' investment rating and a target price of 670,000 KRW.

No Woo-ho, a researcher at Meritz Securities, stated, "Third-quarter sales are expected to be 8.4 trillion KRW, and operating profit is projected at 610.2 billion KRW, demonstrating improved profitability compared to the previous quarter."

No explained, "The changes from the previous estimates reflect the effect of the won-dollar exchange rate increase, normalization of shipment volumes due to the July start of operations at the GM-bound Ultium Cells Plant 1, and the reduction in raw material procurement costs."

No forecasted that LG EnSol's North American business remains solid, which will improve investment sentiment in the second half of the year. He said, "Events that could reverse the sentiment in the second half include securing new orders from major customers such as Toyota (USA), Ford (JV, Turkey), and the possibility of increased sales to Tesla with the mass production of 4680 cylindrical batteries around the end of the year."

The background for the weakened investment sentiment in the secondary battery industry is due to demand risks arising from the deteriorating competitiveness of European OEMs in electric vehicles. The launch of Tesla Model 3 Highland, a key customer model, also had an impact. As a result, shipments of cylindrical batteries temporarily decreased.

LG EnSol is pursuing a mid- to long-term battery chemistry diversification strategy. No stated, "From 2026, plans to move beyond the previously focused high-nickel cathode materials to early mass production of high-voltage mid-nickel, high-manganese, and LF(m)P will be secured through collaboration with domestic material companies and U.S. startups."

He added, "Attention should be paid to the fact that the currently weakened investment sentiment surrounding the secondary battery industry, observed around the quarterly earnings briefing last July, is highly likely to improve in the future."

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