KB Securities said on the 5th that LG Energy Solution is expected to see medium- to long-term earnings improvement on the back of growth in energy storage systems (ESS) and 46-series cylindrical batteries.
It kept its investment opinion at "Buy" and raised the target price to 580,000 won from 530,000 won. The previous trading day's closing price of LG Energy Solution was 422,000 won.
Jeon Woo-jae, an analyst at KB Securities, said, "As production lines are being converted following large-scale ESS orders, utilization rates are improving," and noted, "Backlog for 46-series battery orders is also increasing rapidly and will be a growth driver in 2026–2027."
Jeon projected that LG Energy Solution's second-quarter results will improve significantly. Although it posted an operating loss of 208.0 billion won in the first quarter, he forecast an operating profit of 310.7 billion won in the second quarter, returning to the black.
As the ESS business expands in earnest, sales volume is expected to increase 41% quarter over quarter, and the likelihood is high of receiving compensation due to shortfalls against contracted volumes with some electric vehicle (EV) clients, the analysis said. In addition, battery sales for European electric vehicles, which were weak in the second half of last year, are expected to gradually recover.
It also highlighted medium- to long-term growth. Jeon estimated that LG Energy Solution's 46-series battery order backlog increased from about 300 GWh at the end of the year to 440 GWh as of April this year. Major clients include Rivian, Ford, Mercedes, and BMW. He projected that once the U.S. production facility starts operations at the end of this year, full-fledged contribution to earnings will begin in 2028.
The ESS business is also growing rapidly. Jeon said, "Next year's ESS shipments will reach 28.6 GWh," and added, "With the current order backlog exceeding 150 GWh, shipments could surpass the forecast depending on the pace of production line conversion."
He also suggested a possible recovery in the electric vehicle market. He explained that as the U.S. EV industry undertook aggressive production adjustments from late last year through the first half of this year, inventory burdens are falling sharply. In fact, U.S. new EV inventory days fell from 130 days in Dec. last year to 79 days in Apr. this year.
He also viewed the reduction in investment burden positively. He said, "By using existing EV battery facilities for ESS production, capital expenditures (CAPEX) will decrease from 10.8 trillion won this year to around 5.9 trillion won next year."
Jeon said, "With large-scale investments wrapping up, the company will enter a phase where cash generation begins in earnest," and predicted that operating profit will recover to around 4.6 trillion won in 2027.