Secondary Battery Stocks Hit New Lows in Succession... Stock Price Recovery Remains Distant

LG Energy Solution, Samsung SDI, LG Chem, and Ecopro Hit 52-Week Lows During Trading
LG Energy Solution Falls Below 300,000 Won for the First Time Since January 2022 IPO
Investor Sentiment Weakens Amid U.S. Policy Uncertainty
Full-Fledged Earnings Recovery Expected Next Year

Secondary battery stocks remain mired in a slump. This is because, in addition to the slow pace of industry recovery, policy uncertainty is also weighing on these stocks.

According to the Korea Exchange on May 19, on May 16, shares of LG Energy Solution, Samsung SDI, LG Chem, Ecopro, and SK Innovation all hit new 52-week intraday lows.

LG Energy Solution closed the day down 5.37% at 290,500 won. During the session, it fell to as low as 290,000 won, marking a new 52-week low. This is the first time the price has dropped below its IPO price of 300,000 won since its listing in January 2022. Its market capitalization also fell below 70 trillion won, causing it to lose its third place market cap ranking to Samsung Biologics.

Samsung SDI hit a new 52-week low of 164,100 won during the session and closed down 2.95% at 164,700 won. LG Chem dropped 4.4%, falling to a new 52-week low of 193,500 won during trading, while SK Innovation also set a new 52-week low of 87,200 won. Ecopro ended the day down 3.50% at 44,050 won, also a new 52-week low.

Secondary battery stocks, which have already been struggling due to the temporary stagnation in electric vehicle demand (the so-called "EV chasm"), have seen their share prices weaken further as policy uncertainty has recently emerged.

On May 12 (local time), a Republican-led amendment to the Inflation Reduction Act (IRA) was introduced in the U.S. House of Representatives. The amendment includes provisions for the early termination of various subsidies for eco-friendly vehicles (including electric vehicles), as well as the phased reduction and restriction of the Advanced Manufacturing Production Credit (AMPC).

Jang Junghoon, an analyst at Samsung Securities, commented, "If the amendment passes, all subsidies for eco-friendly vehicles would end within the second year of a Trump administration. This would likely dampen U.S. demand for electric vehicles due to higher prices, placing a burden on Korean secondary battery companies."

In particular, if the AMPC is reduced, it is expected to have a significant impact on LG Energy Solution's earnings. Choi Moonseon, an analyst at Korea Investment & Securities, stated, "If the AMPC for modules is cut from $45 to $40, LG Energy Solution's operating profit is expected to decrease by 16.4% based on 2026 forecasts (and by 12.6% based on 2027 forecasts), while Samsung SDI's operating margin is projected to drop by 0.8 percentage points (and by 9.9 percentage points based on 2027 forecasts). The impact on LG Energy Solution's earnings is expected to be greater."

Recently, POSCO Future M's 1.1 trillion won rights offering has also been cited as a negative factor for already subdued investor sentiment toward secondary battery stocks. Kwon Junsu, an analyst at Kiwoom Securities, said, "Concerns are spreading in the market about the methods of capital raising within the secondary battery sector. Overall, domestic companies are prioritizing policy funds and borrowing, but there are increasing cases of capital raising through rights offerings, hybrid bonds, and perpetual convertible bonds (CB) within the sector."

There are predictions that a full-fledged recovery in the earnings of secondary battery stocks will not be possible until next year. Kwon added, "Except for a few companies, first-quarter results are generally expected to be the quarterly low point. However, whether the U.S. maintains high tariffs and any changes to IRA policies will be key variables for earnings and stock price direction going forward. While a full recovery in the sector's business and earnings is likely only next year, given the leading nature of stock prices, there may be trading opportunities for individual stocks in the second half of this year depending on whether uncertainties are resolved."