[MarketING] Electric Vehicle Stocks Surge on Strong Earnings

Electric Vehicle Stocks Surge on Consecutive Strong Earnings
LG Energy Solution Up Over 6%, Hyundai Motor Rises More Than 5%
KOSPI Recovers to 2460 Level

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] Electric vehicle-related stocks surged significantly on strong earnings, driving index gains. The KOSPI, which rose for two consecutive days, approached the 2470 level, while the KOSDAQ also neared the 740 mark.

Electric Vehicle Stocks Smile Brightly on Strong Earnings

On the 26th, the KOSPI closed at 2468.65, up 40.08 points (1.65%) from the previous day. The KOSDAQ ended the session at 738.94, rising 6.59 points (0.90%). The KOSPI, which started the day recovering the 2430 level, quickly climbed to the 2460 level.

The strong earnings continued to boost electric vehicle-related stocks, leading the index rise. LG Energy Solution closed at 517,000 KRW, up 6.82%. LG Energy Solution has risen for three consecutive days, regaining the 500,000 KRW level for the first time in about a month. Samsung SDI rose 3.54%. Hyundai Motor increased by 5.55%, and Kia by 6.62%. In the KOSDAQ market, L&F closed up 8.36%, EcoPro BM rose 3.64%, EcoPro increased 6.13%, and Cheonbo gained 6.77%.

Following Tesla's solid earnings, strong performances from Hyundai Motor and EcoPro BM supported the stock price increases. Tesla announced on the 25th (local time) that its Q4 revenue last year was $24.32 billion (approximately 30.7 trillion KRW), with a net profit of $3.69 billion. Revenue increased 36% year-over-year, and net profit rose 59%. Earnings per share (EPS) were $1.19, surpassing Wall Street estimates of $1.13. Automotive revenue, which accounts for the majority of total income, was $21.3 billion, up 33% from the previous year. However, the total margin rate was 25.9%, marking the lowest level in five quarters.

Hyundai Motor recorded an operating profit of 9.8198 trillion KRW last year, a 47% increase from the previous year, achieving its highest-ever performance. It was the first time operating profit exceeded 9 trillion KRW. The Q4 operating profit rose 119.6% to 3.3592 trillion KRW.

EcoPro BM disclosed that its Q4 operating profit last year was 97 billion KRW, a 253.3% increase year-over-year. During the same period, revenue rose 285.8% to 1.9441 trillion KRW, and net profit increased 67.1% to 51.2 billion KRW. For the full year, revenue grew 260.6% to 5.3569 trillion KRW, and operating profit increased 232.5% to 382.5 billion KRW.

Positive developments also added momentum. The Ministry of Trade, Industry and Energy recently held the Industrial Technology Protection Committee and approved the export of POSCO Chemical’s national core technology for nickel content exceeding 80% (high-nickel) cathode material design, manufacturing, and process technology. POSCO Chemical rose 14%.

Kim Seokhwan, a researcher at Mirae Asset Securities, analyzed, "Along with Tesla’s strong earnings, Hyundai Motor’s record quarterly performance, EcoPro BM’s strong Q4 results, and POSCO Chemical’s approval for exporting core cathode material technology, individual stock positives were simultaneously reflected, showing strength across secondary batteries, materials, and finished cars."

LG Energy Solution Faces Supply-Demand Shock Concerns Due to Lock-up Release

While secondary battery stocks have recently continued their strong performance, LG Energy Solution faces concerns over supply-demand shocks as its employee stock ownership lock-up period is about to expire.

The lock-up on approximately 7.925 million shares held by LG Energy Solution’s employee stock ownership association will be lifted, allowing sales starting from the 30th. Assuming the deposit date as the listing date (January 27 last year), the lock-up expiration date would be January 27 this year, and the release date should be the 28th. However, since the 28th is a non-trading day, the final lock-up release date will be the 30th. Nonetheless, there is a possibility of shares being released on the 27th. Ko Kyungbeom, a researcher at Yuanta Securities, explained, "Employee stock ownership lock-ups differ from general lock-ups in terms of deposit date and period calculation. Since the deposit date information is unknown, the possibility of release on the 27th should also be noted."

There is analysis that a supply-demand shock could be significant if the employee stock ownership lock-up is lifted. Researcher Ko said, "If the employee stock ownership shares, which have recorded an excess return of 56.5% compared to the public offering price, are released, the supply-demand shock will be high. Although the employee stock ownership stake of 3.39% is similar to that of general large IPOs, its proportion relative to actual circulating shares reaches 23.1%." He added, "Approaching from a buying perspective is not too late even after confirming the release of employee stock ownership shares, and that time is not far off."