[Edaily Reporter KIM YOON-JEONG ] DB Securities cited volume-based incentives in the mid-to-large-sized electric vehicle (EV) battery segment and strong growth in the energy storage system (ESS) business as the main factors behind LG Energy Solution’s preliminary third-quarter earnings exceeding expectations. The analysis notes that volume-based incentives were higher than initially anticipated, and ESS revenue growth also surpassed previous guidance.

According to DB Securities on the 12th, LG Energy Solution’s preliminary consolidated revenue for the third quarter of this year was 9.6 trillion won, up 69% year-over-year and 10% quarter-over-quarter. Operating profit was 756 billion won, a 567% increase from the previous quarter. The U.S. Advanced Manufacturing Production Tax Credit (AMPC) amounted to 417 billion won.
Ahn Hoi-soo, an analyst at DB Securities, cited volume-based incentives in the mid-to-large EV battery segment as the primary factor behind the earnings surprise. He noted that incentives, initially expected to be in the range of 100 to 200 billion won, were recognized at approximately 400 billion won. From an operational perspective, he assessed that the company demonstrated solid revenue growth, driven by improved capacity utilization at its European plants and strong sales in Indonesia.
The second factor is the higher-than-expected growth in the ESS business. Analyst Ahn noted, “While the previous guidance projected revenue growth of about 40%, based on the AMPC growth rate, we estimate growth of about 70%.” It was determined that the utilization rates of factories now in full operation in the U.S. are mostly in the 80–90% range. Analyst Ahn stated, “We expect margin improvement to be even more pronounced once the bottleneck in the PackLink process is further alleviated.”
Revenue growth is projected to continue in the fourth quarter as volume-based incentives are recognized. Consolidated revenue for the fourth quarter is estimated at 10 trillion won, with operating profit at 600 billion won. The operating profit margin is expected to be 5.9%, and AMPC is projected at 486.8 billion won. The firm anticipates that volume-based incentives will be recognized in the fourth quarter, following the third quarter.
For next year, the firm projected continued growth in the small-format battery and ESS businesses. Production of the 46-series batteries is scheduled to begin in Arizona, and business with Rivian, Chery, and Tesla was cited as a growth driver. ESS shipments are estimated to increase from 33 gigawatt-hours (GWh) this year to 51 GWh next year. ESS shipments to Tesla are scheduled to begin at the end of next year.
Analyst Ahn projected that 2027 earnings will exceed 2023 levels.
DB Securities maintained its “Buy” rating on LG Energy Solution with a target price of 570,000 won. It also maintained its “Top Pick” designation within the sector.
Analyst Ahn stated, “We believe the company is well-positioned to align with U.S. grid security policies through its proactive expansion of ESS production capacity in the U.S. and its entry into the system integration (SI) business.” He added, “Considering the valuation multiples of comparable U.S. SI companies such as Tesla and Fluence Energy, the premium is justified.”