LG Energy Solution's stock price is strong, driven by the announcement of its highest quarterly revenue to date. The company posted surprise earnings that exceeded market expectations by more than double, as its energy storage system (ESS) business performed well and electric vehicle (EV) sales recovered, particularly in Europe. Consequently, secondary battery stocks are also rising in tandem.
At 11:05 a.m. on the 9th in the KOSPI market, LG Energy Solution was trading at 410,500 won, up 19,500 won (4.99%) from the previous close. The stock briefly reached as high as 418,000 won during intraday trading. At the same time, Samsung SDI, a secondary battery manufacturer, was at 586,500 won, up 24,500 won (4.36%), and SK Innovation was at 162,650 won, up 3,050 won (1.91%).
Secondary battery materials, components and equipment companies are also rising in tandem. WCP, a separator manufacturer—a key material for secondary batteries—was trading at 11,500 won, up 1,180 won (11.43%) from the previous close. Nine Tech, a secondary battery equipment company, was at 2,855 won, up 155 won (5.74%). Aekyung Chemical, which operates in next-generation battery materials, was at 11,320 won, up 500 won (4.62%). EcoPro BM and EcoPro, representative secondary battery materials, components and equipment companies, were rising by 3.45% and 1.85%, respectively. POSCO Future M was trading at 197,900 won, up 3.40%.
Kim Ju-yeon, a researcher at Mirae Asset Securities, explained, "LG Energy Solution recorded its highest quarterly revenue to date, and the sector as a whole is strong due to momentum from strong North American ESS and European electric vehicle sales."
LG Energy Solution announced on the same day that its preliminary third-quarter revenue for this year was 9.64 trillion won, up 59.0% year-on-year, and operating profit was 765 billion won, a 25.7% increase. This marks the second consecutive quarter of profitability. Operating profit more than doubled the market consensus estimate (321.7 billion won). Securities firms had not anticipated such surprise earnings even as recently as the 7th.
Lee Jin-myung and Kim Myung-ju, researchers at Shinhan Investment Corp, predicted in a report on the 7th that LG Energy Solution's third-quarter operating profit would be 327.5 billion won, in line with market consensus estimates, and forecast that earnings growth would fully materialize starting from the fourth quarter.
However, profitability improved significantly more than expected as growth in mid-nickel shipments to Europe continued and North American ESS shipments also increased. The recovery in EV volumes for Europe also had a positive impact on performance.
Samsung Electronics also announced record preliminary earnings for the third quarter on the same day, with quarterly operating profit exceeding 100 trillion won, but unlike LG Energy Solution, its stock price is falling. At the same time, Samsung Electronics was trading at 268,000 won, down 500 won (0.19%) from the previous close. Samsung Electronics' preliminary third-quarter operating profit was 107.4 trillion won, slightly exceeding the securities firms' consensus estimate (106.6401 trillion won).
This is interpreted as being because market expectations for secondary battery earnings were not very high, unlike in the semiconductor sector where expectations had already risen to a high level. Han Ji-young, a researcher at Kiwoom Securities, explained, "Recently, Micron showed limited stock price gains despite strong earnings, and even with positive news such as the September semiconductor export surprise emerging consecutively for domestic semiconductor stocks, Samsung Electronics and SK Hynix have also shown weak stock price momentum." She added, "As market expectations for semiconductor stocks have risen, the focus of semiconductor stock prices has shifted from immediate positive factors to the sustainability of profits beyond next year."
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