[Click eStock] "LG Energy Solution, Demand Improvement Needed for Trend Rebound... Target Price Up"

Target Price Raised by 12% Compared to Previous Level

Shinhan Investment Corp. raised the target price for LG Energy Solution from 430,000 KRW to 480,000 KRW on the 5th, stating that a demand improvement signal is necessary for a sustained rebound. The investment rating was maintained at 'Buy.'

Jung Yong-jin, a researcher at Shinhan Investment Corp., explained, "Global electric vehicle demand has continued to be sluggish, and domestic consumer sentiment cooled due to fires, but LG Energy Solution rose 28% from its low point after reflecting negative factors and the bottoming-out theory of demand following the Q2 earnings announcement this year." He added, "For a sustained rebound, a signal of demand improvement is needed." He further noted, "Inventory adjustments by LG Energy Solution's major customers are sequentially concluding, so among major cell manufacturers, the fastest sales rebound is expected."

He expressed the view that there is room for improvement each quarter in the second half of the year. Researcher Jung said, "Electric vehicle demand mainly consists of Europe (Volkswagen, Renault, etc.), the U.S. (GM, etc.), and Wontong (U.S. electric vehicle companies). Europe reflected inventory adjustments and demand stagnation from Q4 last year, but in the second half, inventory adjustments are wrapping up, marking the first step toward normalization." He analyzed, "Considering the tariff imposition on Chinese electric vehicles starting in November and the tightening of CO2 regulations in 2025, cautious expectations for order expansion are possible." Although Wontong experienced profitability declines due to intensified inventory adjustment pressure since early this year, assuming inventory adjustments in Q3 like Europe, normalization is expected around Q4. Researcher Jung said, "Demand improvement is possible at the time of new Wontong product application," adding, "As the demand axis shifts from North America to Europe and Wontong, uncertainty will decrease."

Inventory adjustments in North America are a risk factor in the second half. Researcher Jung forecasted, "There is a possibility of inventory adjustments in North America, where wholesale sales have been steady, as a risk factor in the second half, but the adjustment scale is expected to be small."