iM Securities analyzed on the 8th that the implementation of the U.S. tax cut law would expand uncertainties in the future regarding LG Energy Solution. It is predicted that the premature termination of the tax credit for electric vehicle buyers will inevitably lead to a downward adjustment in North American electric vehicle sales. The target stock price is 400,000 won, maintaining a 'buy' investment opinion while postponing any adjustments until after the U.S.-China trade negotiations.
LG Energy Solution announced its second-quarter revenue of 5.6 trillion won and operating profit of 492 billion won, significantly exceeding market expectations (consensus). Despite the decline in the won-dollar exchange rate, major customer GM's inventory adjustments were not significant, and the impact of products supplied to Tesla, which began from the end of the first quarter, contributed. The operation of the local U.S. energy storage system (ESS) factory since June also generated additional advanced manufacturing production tax credit, acting as a positive factor.
However, on the 4th, U.S. President Donald Trump signed 'One Big Beautiful Bill,' which indicates that future performance uncertainties are increasing. The tax credit for electric vehicles is set to prematurely end on September 30 this year due to the implementation of this bill. Initially, the tax credit of up to $7,500 was expected to be maintained for electric vehicle buyers until the end of 2032. Although the worst-case scenario of the early termination of AMPC was avoided, a decline in electric vehicle sales is anticipated in the long term.
Jung Won-seok, a researcher at iM Securities, noted, “Considering the deepening uncertainties in North America and Europe, which are the largest demand markets, it is difficult to rule out the possibility of stock price adjustments due to high valuation burdens,” adding, “While adjustments to the target stock price and investment opinion may be unavoidable, we will withhold judgment until after the imminent conclusion of U.S.-China mutual tariff negotiations.”