 |
Photo = Yonhap news |
[Alpha Biz= Paul Lee] NH Investment & Securities has cut its target price for LG Energy Solution by 7% to KRW 420,000, citing concerns over slowing electric vehicle (EV) demand in the United States amid potential tariff hikes under a Trump administration. The firm maintained its “Buy” rating on the stock.
“The introduction of U.S. tariffs could dampen EV demand, so we’ve raised our discount rate on valuation multiples from 10% to 15%,” the brokerage said in a report. “However, in the short term, General Motors (GM) is expected to build up inventory in preparation for potential changes to tariffs and the Advanced Manufacturing Production Credit (AMPC), which should help keep AMPC-related benefits steady.”
While U.S. EV demand may face headwinds, NH pointed to stronger-than-expected pure EV sales in Europe as a positive indicator. The firm forecast pure EV sales growth of 39% in Germany, -7% in France, and 42% in the UK. French sales are expected to return to positive growth in April, following a base effect from subsidy cuts in March 2024.
“Robust sales in Europe will likely deplete OEMs' battery inventories, leading to inventory accumulation starting in Q2,” the firm noted. “We expect LG Energy Solution to benefit from the European market rebound and continue to list it as our top pick in the sector.”
NH Investment & Securities also projected strong Q1 results, with estimated sales of KRW 6.3 trillion and operating profit of KRW 374.7 billion—well above the market consensus of KRW 6 trillion in sales and KRW 67 billion in profit. The upside surprise is attributed to stronger-than-expected AMPC benefits, favorable exchange rates, and one-off gains.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
