[Click eStock] "LG Energy Solution Enters Emergency Management... Target Price ↓"

On the 30th, NH Investment & Securities downgraded the target price of LG Energy Solution to 440,000 KRW, stating that the company has entered emergency management. The investment rating was maintained as 'Buy.'

Researcher Joo Min-woo said, "The target price downgrade is due to lowering the 2025 volume growth rate from the previous year-on-year 23% to 13%," adding, "Sales forecasts for Europe and GM have been revised downward."

Researcher Joo explained, "In Europe, following the January meeting between the European Union (EU) Commission President and the automotive industry, it is expected that fines for excess carbon dioxide (CO2) emissions will be eased," and added, "While the emission allowance will decrease as planned, only the fine regulations are assumed to be relaxed, reflecting the downward adjustment in growth rate."

He said, "GM sales have been lowered from the previous forecast of 40GWh, a 33% increase year-on-year, to 33GWh, a 10% increase year-on-year," and added, "GM's EV inventory is expected to approach about 80,000 units (assuming production of 200,000 units and sales of 120,000 units), indicating a need to slow down battery inventory accumulation."

He continued, "However, benefits are expected from the launch of Tesla's new car, the 'Model Y F/L,' early this year, so if adjustments are made after the January earnings briefing, a buy recommendation will be given."

Meanwhile, the fourth-quarter performance is also expected to be weak due to low demand, even considering seasonality, falling short of consensus. Fourth-quarter sales are projected to decrease by 16% year-on-year to 6.7 trillion KRW, with an operating loss of 258.4 billion KRW.

Researcher Joo explained, "Sales of both automotive batteries and energy storage system (ESS) batteries were sluggish due to weaker-than-expected demand, and the profitable GM sales (AMPC) also slowed by 33% compared to the previous quarter, weakening margins," adding, "Additionally, one-time costs related to inventory are also expected to be reflected."

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