LG Chem’s battery, ranked No. 1 in the world, became independent to ensure live ammunition

It is necessary to attract investment funds after the first surplus and the order balance increases

The fierce battery market environment is also stimulating

Looks like it will take some time for it to be listed … Emphasis on “promoting something separate from litigation”

(Seoul = Yonhap News) Reporter Choi Jae-seo = LG Chem[051910]When the decision to divest is made after 25 years of starting development of this battery, attention is drawn to the background and prospects.

In this spin-off, you read LG Chem’s confidence in the high-performance record in the second quarter of this year after winning the title of ‘No. 1 in the world ‘in the electric vehicle battery market.

Also, CATL in China and SK Innovation in Korea[096770] It can also be interpreted as an attempt to secure an active cartridge that will worry the market amid increasingly fierce competition for investment in facilities with competitors.

Even after the spin-off, it will take some time for LG Energy Solutions (tentative name) to go public, but the industry expects this spin-off to be recorded as a ‘quantum leap’ of the LG Chem battery business.

◇ What is the background to the spin-off decision? … LG Chem’s ‘founded trust’

As one of the reasons for the division of the company, LG Chem cited the large-scale creation of structural benefits from electric vehicle batteries.

In the second quarter of this year, LG Chem achieved record operating profit in the electric vehicle battery business. It is evaluated as the moment that gave confidence to the battery business, which has been in the red for several quarters.

Furthermore, the surplus is expected to seriously expand from the second half of this year, and an annual surplus is also expected.

Prior to this, LG Chem ranked first with 25.1% of the world ranking of electric vehicle battery use (SNE Research) from January to July this year.

After easily surpassing Japan’s Panasonic, it also surpassed China’s largest battery maker CATL, showing its presence.

According to LG Chem, the company has secured competitive advantages in price, performance and safety through preventive R&D, taking the lead in winning 3G electric vehicle projects.

Since LG Chem started developing batteries in 1995, it has invested billions of won in pure R&D and obtained more than 22,000 technologies based on the number of patents.

In 2007, it mass produced the world’s first NCM523 battery, and in 2016 it also launched a high-nickel bag-type NCM622 battery. In the second half of next year, it plans to mass produce NCMA batteries with a nickel content of 90%.

The success of the orders continues every year. Last year, it announced the establishment of a joint venture with GM of the United States and is applying batteries to Hyundai and Kia, as well as Ford, Volkswagen and Renault.

It is expected that if the value of the battery business is reassessed through this division, it will be easier to attract investment funds.

◇ Fierce Battery Competition Encouraged LG Chem Spin-off

CATL in China, Panasonic in Japan, Samsung SDI in Korea[006400]The ‘battle of speed’ with competitors like SK Innovation and also fueled this spin-off.

CATL awarded LG Chem the number one position this year, but it has a strong backbone of the Chinese giant electric vehicle market.

LG Chem’s main market, Europe, is also building a 100GWh battery plant and is considering establishing a plant in the United States.

In the case of Panasonic, a company that has been equipped with battery technology for a long time and has a strong relationship with Tesla, leading to its dominant market share in the United States.

Furthermore, Samsung SDI and SK Innovation are gradually increasing their market share and in particular the momentum from SK Innovation, the opponent of battery lawsuits, is scary.

In this situation, LG Chem is aggressively expanding orders to concern the next generation electric vehicle market.

At the end of 2017, the order book for electric vehicle batteries was 42 trillion won, and the most recent order balance reached 150 trillion won.

To answer this, LG Chem plans to expand its total battery production capacity to more than 100 GWh (gigawatt hours) by the end of this year.

This is the amount that can produce 1.65 million pure electric vehicles that can drive 380 km per charge.

The plan is to expand to more than 200 GWh by 2023, and at this time, LG Chem’s battery will be able to produce 3.3 million electric vehicles.

As of now, LG Chem is investing more than 3 trillion won per year in facility investments, and the demand for mutual funds will continue to increase in the future.

If investment funds can be attracted through this division, it will be possible to ease the financial burden and ensure a solid “life”.

◇ After the spin-off, LG Energy Solution … “Is it listed next year?”

LG Chem said that specific details regarding the IPO of LG Energy Solutions have not yet been confirmed.

However, the stock market expects to undertake a serious initial public offering beginning in the first half of next year and at least the second half of next year.

LG Chem also did not skimp on a word about the battery lawsuit against SK Innovation, which is currently ongoing. However, internally it is known that “the suit and the participle are separate”.

In the industry, if this spin-off is to go smoothly and go public, it is expected that the speed to close the demand for batteries with an agreement will also be expected.

Furthermore, there is an expectation that this spin-off will play a positive role in the petrochemical business that remains at LG Chem.

An LG Chem official explained: “We will focus on timely investments in the petrochemical, advanced materials and bio sectors to have a balanced portfolio alongside the battery business.”

LG Chem plans to promote the new corporation as the world’s best energy solutions company, but some investors are complaining about it.

When LG Chem’s share price fell by approximately 9% for two days, a public petition appeared to “avoid harm to individual investors.”

However, in the securities industry, the spin-off is expected to be positive for LG Chem’s share price in the long term.

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