[Click eStock] "LG Chem, Performance Improvement Across All Divisions from Q2... Target Price Down"

Target Price Lowered from 575,000 Won to 530,000 Won

On the 19th, KB Securities forecasted that LG Chem's performance across all business divisions would show improvement starting from the second quarter of this year. The target stock price was lowered from the previous 575,000 KRW to 530,000 KRW, while maintaining a 'Buy' investment rating.

Jeon Woo-je, a researcher at KB Securities, explained, "The downward revision of the target price reflects a 26% and 7% reduction in earnings per share (EPS) for 2024 and 2025, respectively, due to the slowdown in LG Energy Solution's performance. However, we maintain a high upside potential of 49% and the investment rating because the petrochemical and advanced materials businesses have shown simultaneous recovery since the first quarter, and there is no significant change in the long-term profit trend."

From the second quarter, an overall improvement in performance is expected. Researcher Jeon stated, "Operating profit in the second quarter is expected to recover to 500.8 billion KRW, an 89% increase compared to the previous quarter. Notably, profit improvements are expected not only from LG Energy Solution but across the entire company." The petrochemical division is anticipated to return to profitability due to a market recovery focused on high-value-added synthetic resin (ABS) and the new operation of high-value-added polyolefin elastomer (POE) and isopropyl alcohol (IPA). The advanced materials division is also expected to maintain solid performance following the first quarter. Jeon analyzed, "In the advanced materials segment, the cathode materials division will see improved results as price declines conclude and sales volume recovers in the second quarter. Additionally, 80 billion KRW of license-out profits in life sciences will be reflected in the second quarter."

KB Securities estimated LG Chem's operating profits for the third and fourth quarters to be 1 trillion KRW and 1.1 trillion KRW, respectively. Researcher Jeon commented, "This reflects the improved performance of LG Energy Solution in the second half of the year. Despite global electric vehicle (EV) sales falling short of expectations, performance has been steadily recovering since the fourth quarter of last year, and simultaneous profit recovery across petrochemicals and advanced materials is a positive sign." He added, "However, the slowdown in pure EV sales growth leading to declines in lithium and cobalt prices, along with GM's announcement of adjusted sales targets for 2024, could result in price and sales volume adjustments for LG Energy Solution and LG Chem's cells and cathode materials."