LG Energy Solution Ltd

373220: XKRX (KOR)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	₩991,418.00	Vnqtd	Ynztkblj

LG Energy Solution: Largest Korean Battery Producer Expanding in American Market; Shares Overvalued

Vincent Sun

Nov 22, 2023

We initiate coverage on LG Energy Solution, or LGES, with a no-moat rating, fair value estimate of KRW 369,100, and 2-star Morningstar rating. Our fair value implies a 2024 price/earnings ratio of 37 times and EV/EBITDA of 14 times. While we're optimistic about LGES’ battery business outlook and believe the firm will be able to maintain its leading position in the automotive battery industry, shares are overvalued, as market expectations on margin expansion and a potential tax rebate from the U.S. Inflation Reduction Act are stretched, in our view.

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