iM Securities reported on October 12 that LG Energy Solution has achieved strong performance in the third quarter of this year, exceeding market expectations even when excluding one-time gains. The firm maintained a 'buy' rating and set a target price of 550,000 won.
Research analyst Jeong Won-seok stated, "LG Energy Solution's third-quarter revenue reached 9.6 trillion won, a 59% increase compared to the same period last year, while operating profit rose 26% to 756 billion won." He noted that this performance significantly surpassed market expectations despite a decline in the won-dollar exchange rate.
This performance exceeds market forecasts of 8.8 trillion won in revenue and 321.7 billion won in operating profit. Even after excluding approximately 320 billion won in one-time gains from compensation related to the termination of a joint venture with Stellantis in Canada, the operating profit is estimated at 433.5 billion won.
The improvement in performance was driven by the energy storage system (ESS) business. The shipment of ESS products, which had been delayed in the first half of the year, is estimated to have increased by 50-60% compared to the previous quarter. The Advanced Manufacturing Production Credit (AMPC) in the U.S. also recorded approximately 416.9 billion won, a 73% increase from the previous quarter.
iM Securities anticipates that large-scale new orders in the ESS sector in the fourth quarter will be a key driver for stock price increases. LG Energy Solution's target for new ESS orders this year is approximately 90 GWh, with confirmed orders currently around 30 GWh.
Jeong added, "The U.S. ESS market is rapidly growing due to the expansion of renewable energy and increased power demand from AI data centers. We expect large-scale new orders to be concentrated in the fourth quarter, and if these orders are confirmed, they are likely to act as a momentum for stock price increases."
He further noted, "The increase in North American ESS demand and the expansion of new orders due to supply chain restructuring will support long-term performance growth, and we also expect profitability improvements from the transition of ESS production lines and increased operating rates."
* This article has been translated by AI.
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