[Click eStock] "Q3 Earnings Expectations... LG Chem, Target Price Maintained at 660,000 Won"

Yuanta Securities maintained a buy rating and a target price of 660,000 KRW for LG Chem on the 27th, stating that "battery-related profit recovery in the third quarter of this year is expected to be clear."

On the same day, Hwang Kyu-won, a researcher at Yuanta Securities, said, "LG Chem's expected third-quarter performance is ▲sales of 12.6 trillion KRW ▲operating profit of 671.6 billion KRW (operating margin 5.3%) ▲net profit attributable to controlling shareholders of 360.3 billion KRW. Operating profit is expected to show a three-quarter consecutive increase, having bottomed out at 247.4 billion KRW in the fourth quarter of last year, followed by 264.6 billion KRW in the first quarter and 405.9 billion KRW in the second quarter of this year."

The chemical division is expected to remain slightly profitable, while a rapid profit recovery is anticipated in the cathode material and battery divisions. Expected profits by division are ▲basic materials (chemicals) 42.3 billion KRW (previous quarter 32.0 billion KRW) ▲advanced materials 201.9 billion KRW (previous quarter 170.0 billion KRW) ▲battery 465.0 billion KRW (previous quarter 197.5 billion KRW).

Researcher Hwang said, "The expected operating profit for advanced materials is 201.9 billion KRW, indicating normal improvement," adding, "In particular, the operating margin for the cathode material division is expected to recover to 9-10%. This is because the rebound in cathode material selling prices alleviates the burden caused by the use of high-priced raw materials."

He also added, "The expected operating profit for the battery division is around 460 billion KRW. Battery sales volume is expected to increase by about 10%, while the decline in battery selling prices has stopped, so the operating profit and loss in the battery manufacturing division is expected to slightly surpass the break-even point from a 260 billion KRW loss in the previous quarter."

Furthermore, Researcher Hwang said, "LG Chem's stock price has fallen excessively. The price-to-book ratio (PBR) at the end of this month is 0.75 times, significantly below the 0.96 times low during the COVID-19 period," adding, "This is because intensified competition due to global oversupply of electric vehicle batteries and increased financial burdens from operating cash shortages have been excessively reflected in the stock price."

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