Hana sees US grid-storage growth; iM cuts L&F target 12.5%

Korean battery makers can benefit from US demand for grid-scale energy storage systems (ESS) regardless of the midterm election result, Hana Securities argued on Nov. 6. That assessment contrasts with earnings pressure at cathode makers: iM Securities cut targets for L&F and EcoPro BM on Nov. 9 as weak electric-vehicle (EV) demand and profitability risks weighed on its forecasts.

Hana distinguishes demand from utilities replacing Chinese suppliers from hopes of an election-led recovery in EV demand. It identifies LG Energy Solution and Samsung SDI as beneficiaries of that supplier shift.

Separately, LG Energy Solution fell 5.78% to close at 318,000 won on Nov. 9. The KOSPI declined 0.81% to 5,018.85.

Does data-centre regulation change the grid-storage case?

In its Econ Check-up dated Nov. 6 and listed on Nov. 9, Shinhan Securities identified closer congressional scrutiny and possible data-centre regulation as sources of policy uncertainty following the Democrats’ election victory. Its analysts saw permitting and electricity costs affecting the pace of AI investment rather than reversing its direction.

The grid-storage case rests on demand already in place. Hana estimates the existing US market at about 70 gigawatt-hours annually. It attributes utilities’ shift toward Korean suppliers with US production capacity to subsidy and tariff requirements favouring supply chains outside China. That is a brokerage assessment of order allocation, not a guarantee of contracts.

In its official analysis, the brokerage judged exposure to new data-centre construction small relative to the existing grid-storage business. It therefore expected limited damage to Korean ESS suppliers even if some new projects were halted.

Its target market capitalisations of 110 trillion won for LG Energy Solution and 65 trillion won for Samsung SDI rest on projected 2028 net income attributable to shareholders of 3.2 trillion won and 2.2 trillion won, respectively, and a 30–35 times 24-month forward earnings multiple. Hana considers those profits achievable even with stagnant EV-battery sales and continued losses in that business through 2028, supported by ESS growth and US production tax credits.

Would Democrats restore EV subsidies?

The likelihood is low in Hana’s assessment. Democrats had not made EV subsidies a campaign issue, the brokerage argued, so their victory alone did not justify assuming a recovery in US EV demand. Its earnings case for the cell makers therefore relies on ESS growth and a shift away from Chinese suppliers.

Why are weak EV shipments hurting cathode earnings?

At EcoPro BM, EV-related third-quarter sales fell 34% from the previous quarter to 256.1 billion won, according to Shinhan’s Nov. 6 company analysis. It attributed the decline to stalled North American demand and model changes at European automakers.

ESS-related sales rose 173% over the same period to 123.6 billion won. Third-quarter operating profit fell 33% from the previous quarter to 12 billion won; without one-off gains, the company would have recorded an operating loss, the analysts calculated.

Total third-quarter revenue was 558 billion won, down 11% from a year earlier and 3% from the second quarter, according to iM. The brokerage lowered its EcoPro BM target to 90,000 won.

For L&F, iM forecasts higher fourth-quarter shipments but expects a stronger won and inventory valuation losses linked to lower lithium prices to weigh on profitability. It cut its target 12.5% from 120,000 won to 105,000 won.