iM Securities analyzed on the 9th that the performance uncertainty regarding LG Energy Solution has increased since the first quarter of this year due to the United States' reciprocal tariff policy. It lowered the target price from 450,000 won to 400,000 won while maintaining the investment opinion 'buy'. The closing price for LG Energy Solution on the previous trading day was 291,000 won.
iM Securities projected that LG Energy Solution's revenue in the second quarter of this year would decrease by 13% year-on-year to 5.4 trillion won, while operating profit is expected to rise by 48% from the previous year to 289 billion won. Despite the uncertainty caused by the United States' reciprocal tariff policy, demand for electric vehicle batteries in North America is strong, but shipments to Europe are expected to decrease significantly.
Jung Won-seok, a researcher at iM Securities, noted, 'In the past three or four years, the market share of domestic battery cell companies in the European electric vehicle battery market has been on a clear decline due to intensified competition with Chinese companies.' He explained that 'especially, LG Energy Solution's market share in the first quarter of this year is about 20%, marking the largest decline since reaching a peak of about 50% in the third quarter of 2021.'
Major European original equipment manufacturers (OEMs) are planning to expand the adoption of lithium iron phosphate (LFP) batteries in new affordable models set for release next year, suggesting that a further decline in the European market is expected. However, the launch effect of Tesla's new cars is likely to lead to an approximately 15% increase in shipments of cylindrical batteries compared to the previous quarter.
iM Securities pointed out that if the tax cut bill known as the 'One Big Beautiful Bill Act (OBBBA)' enacted by the Trump administration is implemented in July this year, the outlook for the North American electric vehicle market may be downgraded, making adjustments to LG Energy Solution's long-term performance estimates and valuation multiples unavoidable.
Researcher Jung said, 'Recently, uncertainty has grown due to fears of slowing electric vehicle demand and worsening profitability stemming from the United States' reciprocal tariff policy, with the North American electric vehicle market accounting for over 90% of LG Energy Solution's annual operating profit.'
However, it is positive that LG Energy Solution has started mass production of regional LFP battery cells from this month to actively respond to the clear growth in demand for energy storage systems (ESS) driven by the expansion of renewable energy and artificial intelligence (AI) data center construction.
Researcher Jung stated, 'There is also the possibility of battery countervailing tariffs between the U.S. and China in the future, so we are paying attention to new opportunities arising in the North American ESS market.'