[Click eStock] "LG EnSol Q3 Earnings Expected to Fall Short of Estimates"

On the 10th, LG Energy Solution headquarters on Yeouidaero, Yeongdeungpo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Kiwoom Securities forecasted on the 7th that LG Energy Solution's third-quarter earnings will fall short of market consensus. Accordingly, it explained that a downward revision of the 2024 annual earnings estimates is inevitable. The investment rating 'Buy' and the target price of 500,000 KRW were maintained.

Junsoo Kwon, a researcher at Kiwoom Securities, stated, "Third-quarter sales are expected to decrease by 21% year-on-year to 6.5 trillion KRW, and operating profit is forecasted to drop by 53% to 341 billion KRW, falling short of the market consensus of 430.4 billion KRW."

Researcher Kwon explained, "The won-dollar exchange rate declined more than initially expected, and sales of small batteries to Tesla are estimated to have fallen short of expectations. Although the operating rate of the Poland plant improved compared to the previous quarter, it still remains at a low level." He also expected the production tax credit (AMPC) to decrease by 2% from the previous quarter to 436.8 billion KRW.

He projected 2024 sales to plunge 24% to 25.7 trillion KRW and operating profit to shrink 50% to 1.1 trillion KRW. Researcher Kwon evaluated, "Although expectations that the secondary battery sector in the market has bottomed out are spreading recently, the still high market expectations remain a burden."

He added, "Year-end inventory adjustments, the possibility of downward revision of AMPC guidance, ASP decline due to falling metal prices, and exchange rate factors remain short-term downside risks to earnings. After the third-quarter earnings announcement scheduled for the end of this month, a downward revision of the 2024 annual earnings estimates seems inevitable."