LG Energy Solution: We see 2027F as a turning point

研报英文原文证据摘录

LG Energy Solution: We see 2027F as a turning point

Global Markets Research

LG Energy Solution 373220.KS 373220 KS 30 July 2026

EQUITY: CHEMICALS

RatingWe see 2027F as a turning point Remains Buy

Target priceRepositioning product mix amid changing battery Reduced from KRW 560,000environment; maintain Buy KRW 600,000

Maintain Buy – losses likely to narrow from 2H26; an earnings recovery in 2027F Closing30 July 2026price KRW 320,000

Our read-across from 2Q26 results release of Korean battery companies on 30 July is

that: 1) each battery company had one-off gains related to US tariff reimbursement or Implied upside +75.0%

cancellation penalty payment from electric vehicle OEM customers; and 2) losses may be

bottoming out. For LGES, we think the turnaround will likely emerge from early-2027F. Market Cap (USD mn) 52,132.1

2H26 earnings will likely be subdued as they are still undergoing reforming/ optimizing US ADT (USD mn) 125.6

plants to produce energy storage systems ESS. Our investment thesis for LGES is based

on: 1) sizeable US advanced manufacturing tax credit (AMPC) of KRW1.3tn/1.8tn in Relative performance chart

2026F/27F to support operating margin of 2.6%/ 5.9%; 2) ESS capacity expansion to

60GWh by end-2026 (2025: 35GWh) to generate a revenue of KRW8.5tn (+204% y-y) in

2026F; and 3) a strong EV battery customer profile. We estimate 2026F revenue mix to

be 38%/28%/30% for the EV/ESS/cylindrical segments. In its 2Q26 earnings call – where

it incurred operating profit/net loss of KRW7.6tn/113bn – management maintained its

2026E revenue growth guidance of 20% y-y.

Catalysts: Sequential profit recovery, US ESS share gains, rise in Europe battery

demand

We see the following positive catalysts: (1) sequential earnings improvement; (2) ESS