LG Energy Solution (373220.KS): China LFP Cathode Export Surge Bodes Well for US ESS; Model Update

研报英文原文证据摘录

Action |

05 Aug 2026 06:06:07 ET │ 14 pages

LG Energy Solution (373220.KS)

China LFP Cathode Export Surge Bodes Well for US ESS; Model Update

CITI'S TAKE

We update LGES model to reflect 2Q results and our latest assumptions.

China’s LFP cathode export to US and Canada reached a record-high in Jun

(7.9kt vs. 1H26 total of 17.6kt) suggesting robust ESS production ramp up

for Korean battery players. This bodes well for sequential revenue / earnings

recovery of LGES into 3Q/4QE while its Indonesia cathode JV seems unable

to fully meet. On EV-pouch, we believe the robust PRC NCM cathode export

to Poland (contrary to sluggish shipment from Korea) reiterates LGES’s shift

towards affordable EVs (mid-Ni HV) to capture EU’s rapid BEV penetration

increase. This implies structurally lower TAM for KR cathode makers given

LGES’s cost focus although it is still likely to boost non-PFE raw materials

sourcing gradually. We also see further narrowing of EV-pouch loss ahead

due to improving mix (Ultium JV#1 restart with better margin) and further

utilisation rebound in Poland fab.

Headline EBIT likely to improve into 3Q/4QE — We factor in ~4-5GWh EV-related

AMPC in 2H (back-loaded; 1H: nil) given initial low rate after Ultium JV#1 restart and

limited US EV demand pickup (GM guides 2H EV wholesale volume to be up slightly

HoH). We estimate GM’s EV battery usage of ~3GWh per quarter currently. Given EV

could capture 100% of gross AMPC in OP line (contrary to ~60% for ESS), we forecast

AMPC booking of ~W360bn/530bn in 3Q/4Q (2Q: W241bn). The trajectory of ESS

earnings depends on LGES’s ability to overcome pack/link capacity bottlenecks, but

management seems confident of achieving breakeven ex-AMPC OP in 4QE.

n

Buy

Price (04 Aug 26 15:45)

Target price

from W565,000

Expected share price

return

Expected dividend yield

Expected total return

Market Cap

Oscar Yee AC

Year to

Net Profit

Diluted EPS

EPS growth

P/E

P/B

ROE

Yield

Desmond Law

31 Dec

(WB)

(W)

(%)

(x)

(%)

2024A

-1,019

-4,354

-182.3

na

3.6

-4.9

na

2025A

-1,073

-4,585

-5.3

na

3.8

-5.2

na

2026E

-201

-857

81.3

na

3.6

-1.0

na

2027E

1,620

6,922

907.3

47.5

3.3

7.3

na

2028E

4,495

19,208

177.5

17.1

2.8

17.8

na

52.2%

0.0%

52.2%

…