LG Energy Solution seen benefiting from ESS growth; price target raised to 510,000 won

[Financial News] Meritz Securities forecast that LG Energy Solution would post growth above the industry average, driven by its energy storage system (ESS) business. It maintained its ‘Buy’ rating and raised its target price from 440,000 won to 510,000 won.
In a report on the 15th, Meritz Securities analyst Noh Woo-ho said that a short-term buying strategy for battery stocks would be valid around the U.S. midterm elections on November 3, following the announcement of preliminary third-quarter results. He expected the premium on ESS supply chains that exclude China to continue regardless of the election outcome.
LG Energy Solution’s preliminary third-quarter revenue rose 59% year over year to 9.6434 trillion won. Operating profit increased 25.7% to 756 billion won, exceeding market forecasts by 131.6%.
Meritz Securities put LG Energy Solution’s revenue forecast for this year at 32.649 trillion won, 9.2% higher than its previous estimate. It raised its operating profit forecast by 38.1% to 1.2095 trillion won.
It forecast that next year’s operating profit would reach 4.3492 trillion won, 56.6% above its previous estimate. It identified the selection of operators for the country’s third ESS Central Contract Market round as a key driver toward year-end. The project is 1.13 GW in scale, equal to the combined volume contracted in the first and second rounds. LG Energy Solution is pursuing the localization of its entire supply chain, including key materials, to win orders. Noh said, “When it comes to achieving the remaining 60 GWh in U.S. ESS orders, direction matters more than timing,” adding, “If domestic ESS orders are confirmed, they will be a positive driver for LG Energy Solution and related supply chains.”
By contrast, it took a cautious view of the prospects for a short-term rebound in batteries for electric vehicles. With France and Germany seeking to delay the phaseout of internal combustion engine vehicles and the United States also deciding to scrap fuel economy regulations, it expected sluggish EV battery shipments to traditional automakers to continue.
Noh said, “LG Energy Solution could grow faster than the industry average through increased shipments of cylindrical batteries and its transition into an ESS manufacturer.”

[email protected] Lee Jeong-hwa Reporter