[Click eStock] "LG Energy Solution to Reflect 4680 Battery Production in Q4 Earnings Next Year"

[Asia Economy Reporter Hwang Yoon-joo] DS Investment & Securities forecasted on the 14th that LG Energy Solution's 4680 battery production capacity will be reflected in its performance starting from the fourth quarter of 2023. Accordingly, they maintained a 'Buy' investment rating and a target price of 500,000 KRW.

Researcher Koo Sung-joong of DS Investment & Securities stated, "LG Energy Solution is expected to mass-produce the 4680 battery in the fourth quarter of 2023, which will be reflected in the performance from the fourth quarter of 2023 to the first quarter of 2024."

Previously, LG Energy Solution announced an investment of 581.8 billion KRW for new facilities at the Ochang 2 plant. They will build equipment to produce cylindrical 4680 batteries by October 2023. The supply scale is 9 GWh, and Tesla is presumed to be the supplier. Along with this, they also announced an expansion of the 2170 battery line. They will invest 150 billion KRW in the Ochang 1 plant to expand the cylindrical line by 4 GWh.

Researcher Koo explained, "Through this announcement, LG Energy Solution plans to invest 730 billion KRW in cylindrical batteries to secure a battery production capacity of 13 GWh."

Meanwhile, Researcher Koo expected LG Energy Solution's second-quarter performance to fall short of market expectations. He stated, "It is estimated that there will be some disruptions in India due to the prolonged lockdown in China, which lasted longer than expected."

He added, "The metal prices, which surged in the first quarter, will negatively affect second-quarter profitability due to the lagging effect. However, as shipments from customers normalize and metal prices show a correction trend along with exchange rate effects, we slightly raised the performance estimates for the second half of the year."

[Image source=Yonhap News]

He pointed out, "What is important is not the short-term performance adjustment but who can reap the most benefits from the growing market."

Researcher Koo emphasized, "LG Energy Solution is the world's second-largest cell maker with the number one electric vehicle company as its customer. They plan to develop the 4680 cylindrical battery by 2023 and expand cylindrical production capacity to 160 GWh by 2025, aiming for a total production capacity of 520 GWh."