/yunhap news
Secondary battery-related stocks are staggering. This is the effect of Volkswagen, which has been supplied with batteries from LG Chem and SK Innovation, declared internalization along with the change of the battery type.
The announcement that LG Chem and SK Innovation’s flagship’pouch-type battery’ would be the main focus of China’s CATL, etc., instead of’pouch-type battery’ was a bad thing. In the securities industry, this trend of internalization is widely evaluated as a negative factor that can undermine the growth potential of K-battery, a new growth industry in Korea.
LG Chem plunges 8% during intraday
On the 16th, LG Chem has plunged more than 8% during the intraday and is trading at the 880,000 won range. Excluding when the stock market was staggered by Corona 19 in March of last year, it was the biggest drop. On this day, SK Innovation also fell to 210,000 won, dropping more than 7% during the intraday.
On this day, LG Chem’s value chains such as POSCO Chemical, L&F, and Chunbo fell one after another. Even Samsung SDI, whose main focus is on prismatic medium and large batteries, dropped more than 2% during the week. This is the appearance of bad news across the secondary battery industry.
The previous day, the world’s second-largest automobile company, Volkswagen Group, announced that it will introduce a’square type battery’ from 2023. It also said that it would build six battery factories by 2030. The scale is 240 gigawatts (GWh), which is twice the annual production capacity of LG Energy Solutions (120GWh) last year. Industry interpretation is that the Volkswagen Group has decided to focus on Chinese CATL’s main focus in order to enter the Chinese market in the future.
In the long run, the overall bad news for K batteries
In the short term, there is also a prospect that Samsung SDI, which mainly produces prismatic batteries, can benefit relatively. However, from a long-term perspective, it is a public opinion that it will act as bad news for Korean battery-related stocks.
The reason why rechargeable battery stocks have been given a high valuation (share price-to-performance level) has been due to the expectation that the growth of the electric vehicle market will lead to earnings improvement in rechargeable battery-related stocks. For LG Chem alone, the price-to-earnings ratio (PER) for 12 months a year ago was 28 times, but increased to 35 times earlier this year.
The stock price surged last year, bringing the valuation several years after considering the timing of expansion. This is because high growth was possible simply by maintaining the current market share. However, with Volkswagen’s announcement, the long-term earnings outlook for LG Energy Solution and SK Innovation will inevitably worsen.
When Tesla declared internalization of batteries through’Battery Day’, the stock industry was not worried. There were many reactions saying, “Internalization is a problem that will only be troubled after 10 years.” It was the logic that the domestic battery industry would benefit from the growth of electric vehicles for at least 10 years.
However, Volkswagen’s change of battery shape and declaration of internalization broke the existing logic. This is because it means that Chinese companies will benefit from the time it takes to internalize. The car maker’s internalization movement, which was frustrating, is also becoming the mainstream.
Tae-Bong Ko, head of the Research Center at Hi Investment & Securities, said, “If battery internalization of each automaker accelerates, it will have a significant negative impact on the domestic battery industry.” I will,” he predicted. Domestic material companies that have established production facilities in Europe are Solus Advanced Materials (copper foil), Dongwha Elec (electrolyte), and Soulbrain (electrolyte). This is the reason why Soluce Advanced Materials rose close to 10% during the week while the secondary battery stocks were all sluggish on this day.
Reporter Go Yoon-sang [email protected]