Jeong Gyeong-hui of LS Securities said on the 14th that while LG Energy Solution is lifting profitability with a focus on large-scale energy storage systems (ESS), the electric vehicle market remains a key variable.
Jeong maintained a "neutral" investment rating on LG Energy Solution and raised only the target price by 7,000 won to 307,000 won. That is 14.7% lower than the previous day's close.
LG Energy Solution posted consolidated sales of 5.6999 trillion won and operating profit of 601.3 billion won in the third quarter of this year (July–September). Excluding subsidies from the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA), operating profit was 235.8 billion won.
Jeong said, "Operating profit generation excluding AMPC is positive," and noted, "We judge this to be due to sales of U.S. ESS packs and systems."
However, given that electric-vehicle batteries account for about 60% of LG Energy Solution's sales and ESS is in the mid-10% range, the EV market remains important, Jeong said. In particular, EV tax benefits in the United States will also disappear starting in the fourth quarter (October–December) of this year.
Jeong said, "LG Energy Solution's profitability after the fourth quarter depends on how much growth in ESS sales can offset the slowdown in U.S. EV sales," adding, "We still see this as a point in time when EV impact is large."