LG Energy Solution’s target price cut as Q4 profit to fall short of expectations

[Source : LG Energy Solution]

LG Energy Solution Ltd. had its target price cut to 620,000 won ($489) from 680,000 won by Shinhan Investment Corp. on Friday as the electric vehicle battery maker’s fourth-quarter operating profit is expected to miss market consensus by a mile.

LG Energy Solution shares were up 1.61 percent to trade at 440,500 won at 1:30 pm on the KOSPI market.

LG Energy Solution’s sales are estimated to reach 8.2 trillion won in the fourth quarter of last year, up 84 percent from a year earlier, with operating profit at 300 billion won, up by 297 percent, but down 42 percent from the previous quarter, said Jung Yong-jin, an analyst at Shinhan Investment.

The revenue figure meets market expectations, but operating profit falls 36 percent below expectations, he explained.

LG Energy Solution achieved strong sales driven by volume increase on top of selling price negotiations, but a one-off cost of 200 billion stemming from incentive payment and inventory adjustment put a burden on the bottom line, the analyst said. Excluding the one-off expenses, the company’s 4Q operating profit came to 500 billion won, which is in line with market expectations.