[Edaily Reporter Shin Ha-yeon] On the 18th, Daol Investment & Securities projected that while #LG Energy Solution’s second-quarter earnings would fall short of market expectations, the positive effects of its energy storage system (ESS) business and the recovery in European electric vehicle (EV) demand would begin to take full effect starting in the second half of the year. The firm maintained its “Buy (BUY)” investment rating and target price of 550,000 won.

Yoo Ji-woong, an analyst at Daol Investment & Securities, stated, “The ESS business is set to turn profitable (including AMPC) starting this year, and the company’s overall profitability
is expected to pass the break-even point (BEP) starting in the second half of 2026,” adding, “While the valuation itself is currently high, investment appeal is rising as profitability improvements are gradually being confirmed.”

Daol Investment & Securities estimated LG Energy Solution’s second-quarter revenue and operating loss at 6.704 trillion won—a 20.5% year-over-year increase—and 18.4 billion won, respectively, marking a return to a loss. The company estimated the AMPC amount at approximately 256 billion won; excluding this, the operating loss is expected to widen to around 275 billion won.

Analyst Yoo noted, “For ESS, revenue is expected to increase by more than 25% quarter-over-quarter as production at new lines, such as the Ontario plant, expands each quarter,” adding, “While shipments of large-format batteries to GM remain sluggish, the Poland plant’s utilization rate reaching 50% will act as a buffer for the company’s overall profitability.”

He also cited the recovery of the European EV market as a positive factor. He assessed, “The rollout of long-body models from EV customers supplied by the Nanjing plant has begun in Europe, and coupled with the high oil prices seen since the start of the year, the company has begun to see structural benefits from the expansion of EV production capacity at its European plants.”

He projected that the recovery of European plant utilization rates would be a key factor in improving earnings in the second half of the year. Analyst Yoo stated, “For large-format batteries in the second quarter, improvements at European plants are the key variable,” adding, “VW and Renault are currently playing the biggest role in improving utilization rates, and we expect GM to begin shipping EV battery volumes starting in the third quarter.” He continued, “We expect production to remain at around 5 GWh for the second half of the year.”

The growth trajectory of the ESS business is expected to be even steeper. Analyst Yoo explained, “Our assumption for ESS shipments eligible for AMPC subsidies is based on a steep growth rate, reaching 8 GWh—the level seen in the previous year,” adding, “Production capacity is expected to exceed 50 GWh by the end of 2026, suggesting continued growth in ESS revenue and profit improvement in 2027 as well.”

He went on to emphasize, “As we move into the second half of 2026, the ESS business could be identified as one of the biggest bottlenecks in AI data center infrastructure,” adding, “Sustained growth in ESS revenue and improved profitability are expected to continue into 2027.”