DS Investment Securities analyzed on the 7th that with the election of Donald Trump as U.S. president, a decline in the front market has become visible, making a downward revision of production capacity (CAPA) estimates inevitable. Accordingly, the investment opinion remains 'neutral,' and the target price is maintained at 400,000 won. The closing price of LG Energy Solution on the previous trading day was 361,500 won.
DS Investment Securities projected that LG Energy Solution's revenue for the fourth quarter of last year would be 6.6 trillion won, with an operating loss of 169.5 billion won, falling short of market expectations. Choi Tae-yong, a researcher at DS Investment Securities, noted, 'The delay in the recovery of operational capacity across all regions,' and explained, 'The small battery sector is expected to see a decline due to ongoing Tesla inventory adjustments and the normalization of the strong performance in the previous quarter for electric tools and IT.'
He further said, 'However, a decrease in operational capacity is expected not only due to inventory adjustments at General Motors, but also because of the continued poor performance of major customers in Europe.' He noted, 'The energy storage system (ESS) will maintain a high level of shipment compared to the previous year, but a delay in some projects is expected to result in lower figures than the previous quarter.'
Research Institute Choi said, 'Although there has been no change in the official CAPA guidance yet, with the election of Trump, a decline in the front market has become visible, making a downward revision of CAPA estimates unavoidable,' and analyzed the situation as, 'There is a judgment that there are still uncertainties surrounding the expansion of the Ultium Cells joint venture Plants 1 and 2, the Polish factory, and the standalone factory in Michigan.'
He also explained, 'However, the fact that some uncertainties surrounding CAPA have been alleviated due to the acquisition of the Ultium Cells Plant 3 and changes in customers is a positive factor,' adding, 'Recent reports that Tesla is struggling with improving the quality of its in-house produced 4680 batteries suggest that dependence on cell makers may increase, potentially highlighting this issue as a momentum in the future.'