Kyobo Securities noted on the 6th that the uncertainty in the electric vehicle market will continue this year due to the effect of the new U.S. administration. It maintained a target price of 480,000 won and a 'buy' investment opinion. The closing price for LG Energy Solution on the previous trading day was 356,000 won.

A perspective view of the battery manufacturing facility that LG Energy Solution is building in Arizona, USA. /Courtesy of LG Energy Solution

Kyobo Securities estimated LG Energy Solution's 4th quarter revenue last year at 6.7196 trillion won, a 16% decrease from the previous year, with an operating loss of 188.1 billion won. This figure is slightly below the market consensus (average forecast of securities firms) of 6.7829 trillion won in revenue and an operating loss of 122.3 billion won.

Choi Bo-young from the Research Institute at Kyobo Securities stated, "The robust volume in North America declined due to off-season effects, and along with year-end volume adjustments, the impact of poor sales in Europe last year and delays in energy storage system (ESS) projects grew, leading to a decrease in revenue compared to expectations."

With inventory adjustments and a decline in the operating rate of North American factories, advanced manufacturing production tax credits (AMPC) are expected to decrease quarter over quarter, and a decline in profit margins due to the disposal of obsolete inventory is also anticipated.

Kyobo Securities believes that uncertainty in the front-end market will continue this year. It forecasts LG Energy Solution's revenue to increase by 9% year-over-year to 28.2291 trillion won, with operating profit rising by 303.7% year-over-year to 2.4726 trillion won.

Research Institute Choi stated, "The prediction uncertainty for the electric vehicle front-end market due to the effect of the new U.S. administration persists, and the decline in raw material prices will be reflected."

Kyobo Securities pointed out the need to pay attention to the directional outlook for the annual market forecast during the earnings announcement conference call at the end of this month. Research Institute Choi noted, "Both Europe and North America are expected to face challenging business environments this year,” and added, “The situation of the front-end market is not recovering as expected, and there are ongoing burdens regarding investments."