Positive Evaluation of US Electric Vehicle Market Expansion and Market Share Reversal
Variables Include Vehicle Unit Price Reduction, Raw Material Cost Surge, and Technological Advances in China
[Asia Economy Reporter Hwang Yoon-joo] 390,000 KRW vs 610,000 KRW.
The difference in target stock prices set by securities firms for LG Energy Solution, which rewrote the history of Korean Initial Public Offerings (IPO), is as much as 220,000 KRW.
According to the financial investment industry on the 26th, LG Energy Solution's target stock price was presented at a minimum of 390,000 KRW (Yuanta Securities) and a maximum of 610,000 KRW (Meritz Securities). Other securities firms also showed stark differences, with Korea Investment & Securities at 600,000 KRW and SK Securities at 430,000 KRW.
The target price in the 600,000 KRW range is based on the expansion of market share in the U.S. market and the mainstream trend of NCM batteries. As of November 2021 cumulative data, the electric vehicle penetration rate in the U.S. was only 4.1%, far below the global average of 7.5%. However, with the Biden administration's active support for eco-friendly policies, the U.S. is expected to grow the fastest in the future.
LG Energy Solution is aggressively targeting the U.S. electric vehicle market through joint ventures with GM, Stellantis, Honda, and others. On the other hand, competitor CATL is facing difficulties entering the U.S. market due to U.S.-China conflicts. Noh Woo-ho, a researcher at Meritz Securities, analyzed, "It is expected that the order backlog will reverse with CATL by securing automaker clients with high demand visibility, and the profit margin gap with CATL will also narrow starting in 2024."
Meanwhile, securities firms that set target prices around 400,000 KRW cite factors hindering LG Energy Solution's continuous stock price rise, including △strengthened demands from automakers △sharp rise in battery raw material prices △speed of technological advancement in China.
A securities firm researcher analyzed, "Automakers have recently been demanding battery price reductions while strengthening quality standards, and there are limits to controlling the rising prices of battery raw materials such as nickel, which burdens battery companies," adding, "It is difficult to predict profit margins." In other words, there are increasing variables that make it difficult to view external conditions optimistically.
The researcher added, "Also, the speed of technological advancement of Chinese battery companies is quite fast. If they compensate for the limitations pointed out in technologies such as LFP batteries, it could affect the three domestic battery companies," and said, "How this issue is resolved could impact future stock prices."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
