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Resilient cathode margins

Recommendation

We maintain our Buy rating on LG Chem but cut our target price by 22.5% to W620,000, reflecting our downward earnings forecast revisions for the advanced materials unit and LG Energy Solution (LGES) and increased net debt.



Market status and outlook

LG Chem’s 3Q23 operating profit jumped 40% QoQ to W860.4bn, beating the consensus by 11.5%. The biggest highlight of the report was better-than-expected cathode materials margin delivery. For 4Q23, we expect operating profit to fall 32% QoQ to W581bn due to profit declines across businesses (chemicals, advanced materials, and LGES).