“Samsung SDI: Q4 order-win announcements to continue”...“LG Electronics plunges 10%; the decline is excessive” [Stocktopia]

[Financial News] Here is a roundup of major securities firms’ reports on the morning of October 8.
After confirming that its core business returned to profitability in the third quarter, Samsung SDI is expected to announce a series of order wins in North America and Europe in the fourth quarter.
LG Electronics’ shares plunged 10% after its third-quarter results were announced, but analysts said the decline was excessive, as results were broadly in line with expectations excluding its subsidiary LG Innotek. GS Engineering & Construction is expected to see its earnings rebound next year, with a recovery in housing profitability and orders for an AI data center in Donghae, Gangwon Province, adding to growth.
◆ Samsung SDI (006400)― DS Investment & Securities / Researcher Choi Tae-yong
- Target price: 940,000 won (up 11.9%, from 840,000 won) ᅵ Previous closing price: 562,000 won
- Rating: Buy (maintained)
DS Investment & Securities raised its target price for Samsung SDI to 940,000 won, saying the company would announce a series of order wins in the fourth quarter.
Expected orders are in the North American energy storage system (ESS) market and from European original equipment manufacturers (OEMs). In Europe, the company aims to win several prismatic battery projects, including lithium iron phosphate (LFP) batteries, by the end of the year.
Researcher Choi Tae-yong said, “In North American ESS, additional discussions are under way following existing long-term supply contracts,” adding, “Once the EU Industrial Acceleration Act’s local production requirements are finalized, European OEMs will have greater incentive to place orders for non-Chinese cells.” In other words, if the European Union (EU) finalizes its local production rules, orders could flow to non-Chinese companies such as Samsung SDI.
Regarding fourth-quarter results, he said, “While third-quarter growth was centered on deferred domestic shipments, U.S. shipments will be added in the fourth quarter.” This is due to the Indiana LFP line beginning mass production in October. As a result, the battery business is expected to return to profitability in the fourth quarter even excluding the U.S. Advanced Manufacturing Production Tax Credit (AMPC).※Advanced Manufacturing Production Credit (AMPC)This program reduces taxes in proportion to production when advanced products such as batteries are made and sold in the United States. The more a company produces at U.S. factories, the greater the benefit, which has a significant impact on battery makers’ profits. A company is considered to be earning money through its “real capabilities” only if it remains profitable even without this credit.※Lithium Iron Phosphate (LFP)These batteries use iron and phosphate as their main materials instead of expensive nickel and cobalt. They store less energy for the same size, but are cheaper and pose a lower fire risk, making them widely used in stationary ESS installations.
◆ LG Electronics (066570)― DB Securities / Researcher Jo Hyun-ji
- Target price: 265,000 won (up 8.2%, from 245,000 won) ᅵ Previous closing price: 208,000 won
- Rating: Buy (maintained)
DB Securities raised its target price for LG Electronics to 265,000 won, saying the stock had fallen too sharply after the earnings announcement.
Researcher Jo Hyun-ji said, “As the shortfall in LG Electronics’ standalone results was not large compared with previous expectations, we believe the share-price decline was excessive.”
Third-quarter consolidated operating profit, including subsidiary LG Innotek, was 781.8 billion won, well below the market expectation of 1.0301 trillion won. By contrast, standalone operating profit excluding LG Innotek was estimated at 701.2 billion won, broadly in line with DB Securities’ previous estimate of 720 billion won.
The chiller business, which supplies cooling equipment for AI data centers, was identified as a key factor for the stock going forward. Researcher Jo said, “The fundamentals remain solid, and with orders for chillers for AI data centers expected to exceed 3 trillion won by year-end, the contribution of those orders to earnings is drawing closer.”※ChillerA large cooling system that chills water and circulates it through buildings or equipment to reduce heat. It is a key component of AI data centers, where servers generate large amounts of heat, and demand is growing as data centers expand.
◆ GS Engineering & Construction (006360)― Hana Securities / Researcher Kim Seung-jun
- Target price: 46,000 won (maintained) ᅵ Previous closing price: 32,850 won
- Rating: Buy (maintained)
Hana Securities maintained its 46,000-won target price for GS Engineering & Construction and its designation as its top pick in the sector. It expects the housing cost ratio to normalize in the mid-80% range and about 17,000 housing units to be offered for sale by year-end, exceeding the annual target of 14,320 units.
A new growth driver is a 1.2-gigawatt (GW) AI data center that GS Group is developing in Donghae, Gangwon Province. Construction permits have been obtained for 100 megawatts (MW) of the project, and the company is targeting a November groundbreaking, with only the selection of a contractor and project financing (PF) left to complete. Hana Securities estimates the value of the contract for the 100-MW portion at about 1 trillion won.
Researcher Kim Seung-jun said, “The current estimate for building and housing revenue does not fully reflect a contract for the 1.2-GW Donghae AI data center, so there is considerable room to raise the estimate.” In other words, earnings forecasts could rise further if the company also wins contracts for the remaining sites.
Hana Securities estimates that operating profit next year will increase 61.7% from this year. Researcher Kim said, “Given the pace of earnings growth the company is expected to show through 2029, a valuation of around nine times earnings is reasonable.”※Project Financing (PF)A financing method that raises funds based on the future earnings of a project itself, rather than a company’s credit or collateral. It is used to secure funding before construction begins on large-scale developments such as data centers and apartment complexes.

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