The global frenzy for electric vehicles (EV) that has seen Tesla Inc’s stock surge threefold is now juicing the shares of a South Korean supplier that has become the world’s biggest maker of electric vehicle batteries.
South Korea’s LG Chem Ltd has surged more than 60 percent this year to a valuation of about US$30 billion, becoming the sixth-largest stock on the benchmark KOSPI and leaving Hyundai Motor Co, the nation’s largest automaker, in the dust.
While LG supplies many automakers, including Hyundai, it has been particularly fueled by a deal to supply batteries to Tesla’s China factory, which is pumping out Elon Musk’s vehicles at a growing clip.
Photo: Reuters
Expanding electric vehicle subsidies in Europe and Tesla’s stupefying rally have buoyed related stocks worldwide, despite global economic concerns. Fundamentals matter little, with Tesla just starting to show profit and electric truck maker Nikola Corp yet to produce its first semi.
“We believe LG Chem is set to benefit the most in Europe with its high market share and positioning,” said Jae Lee, chief executive officer at Timefolio Asset Management SG Pvt, a Singapore-based hedge fund that holds LG Chem shares.
LG Chem had 24 percent of the global electric vehicle battery market as of the end of May. China’s Contemporary Amperex Technology Co Ltd (時代新能源科技) has been hurt by the pandemic, a trade dispute with the US and a scaling back of government subsidies in its home market, although it recently forged a supply contract of its own for Tesla’s Shanghai facility.
LG Chem had a US$124 billion battery order backlog early this year and aims to expand capacity to 100 gigawatt hours by end of the year and 120 gigawatt hours next year.
Investors increasingly view it as a battery company rather than a chemicals producer, despite 52 percent of total revenue coming from chemicals last year, according to Bloomberg Intelligence.
“LG Chem has the largest capacity for EV batteries in the world now and it’s even increasing it, while rivals are not doing so,” said Wooho Rho, an analyst at Meritz Securities Co.
Rho and at least six other analysts raised their price targets for LG Chem this month, with Meritz expecting a consolidated operating profit of 532 billion won (US$440 million) for the quarter ended last month, the most in about two years.
The firm’s shares fell 1 percent in Seoul yesterday, extending its 2.5 percent drop last week.
Some investors are worried that rising competition among battery makers might put pressure on growth in margins, Hana Financial Investment Co analyst Kim Hyun-soo said.
Other market concerns include the possibility that Tesla could announce a new battery supplier at its “Battery Day” event on Sept. 22, Rho said, adding that such concerns are probably overblown given the high barriers for any potential new partner.
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
LEAK SOURCE? There would be concern over the possibility of tech leaks if TSMC were to form a joint venture to operate Intel’s factories, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday stayed mum after a report said that the chipmaker has pitched chip designers Nvidia Corp, Advanced Micro Devices Inc and Broadcom Inc about taking a stake in a joint venture to operate Intel Corp’s factories. Industry sources told the Central News Agency (CNA) that the possibility of TSMC proposing to operate Intel’s wafer fabs is low, as the Taiwanese chipmaker has always focused on its core business. There is also concern over possible technology leaks if TSMC were to form a joint venture to operate Intel’s factories, Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺)
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
RSS