Samsung SDI, LG Energy Solution, and SK Innovation saw their stocks rise on the previous trading day, with gains of 7.7%, 3.96%, and 3.06% respectively, following Q2 profitability improvements across all three Korean battery manufacturers. The three companies achieved Q2 operating profits after previous quarters of losses, with Samsung SDI recording 203.8 billion won in operating profit (its first quarterly profit in seven quarters), LG Energy Solution posting 113.3 billion won, and SK On reaching a record 821.8 billion won. The stock gains reflect investor expectations for continued earnings recovery, supported by the Korean government's announced domestic production promotion tax system for strategic industries including batteries and strong growth in the energy storage system (ESS) market.
Korean Battery Makers Report Q2 Profitability Turnaround
Samsung SDI recorded Q2 operating profit of 203.8 billion won, marking its return to profitability after seven quarters. LG Energy Solution achieved operating profit of 113.3 billion won, turning profitable compared to the previous quarter. SK On posted operating profit of 821.8 billion won, a record quarterly performance that included compensation from the liquidation of its joint venture with Ford in the United States.
Samsung SDI Stocks Recover to 400,000 Won Level
Samsung SDI's stock price recovered to the 400,000 won level on a closing basis after six trading days, according to Korea Exchange data. The three battery stocks continued their upward momentum in early trading on the following day.
Year-to-Date Stock Performance Lags KOSPI Index
Compared to year-end, Samsung SDI's stock price increased 55.65% through the previous close, while SK Innovation rose 9.98%. LG Energy Solution's stock price declined 10.85% over the same period. During this timeframe, the KOSPI index increased 50.89%, meaning two of the three battery stocks underperformed the broader index.
Korean Government Announces Production Tax Incentives for Battery Industry
The Korean government announced the introduction of a domestic production promotion tax system, a Korean version of the Inflation Reduction Act (IRA), that will provide tax reductions proportional to production volume for six strategic industries including secondary batteries, semiconductors, and artificial intelligence (AI).
Global ESS Market Shipments Increase 71% in H1
Global lithium-ion battery energy storage system (ESS) shipments in the first half reached 461.3 gigawatt-hours (GWh), a 71% increase from 269.7 GWh in the prior year period, according to market research firm SNE Research. The ESS market represents a growth area that Korean battery manufacturers are focusing on as a new expansion opportunity.
Securities Firms Raise Price Targets for Battery Stocks
DB Securities maintained a target price of 570,000 won and a "buy" rating for LG Energy Solution. Researcher Ahn Hoe-soo stated that "momentum for ESS orders in the second half is expected to concentrate through preemptive expansion of US ESS capacity," and noted that "Ultium Cells in the US will reduce losses starting with resumption of operations, and the European plant is expected to turn profitable in 2027."
DS Investment Securities maintained a target price of 840,000 won and a "buy" rating for Samsung SDI. Researcher Choi Tae-yong stated that "in Q3, ESS sales are expected to increase 30-40% and maintain double-digit profitability." Regarding Samsung SDI's solid-state battery under development, the researcher noted that "samples are being supplied in the second half, with mass production targeted for the second half of next year," and projected that "humanoids are likely as the first commercialization target."
Sangsangin Securities presented a target price of 140,000 won for SK On. Researcher Baek Young-chan stated that "battery business performance improvement is expected through aggressive cost reduction and ESS order expansion at the low point of electric vehicle demand weakness." IBK Investment & Securities and Hana Securities presented higher target prices of 200,000 won.
FAQ
What were the Q2 operating profits for Samsung SDI, LG Energy Solution, and SK On?
Samsung SDI recorded Q2 operating profit of 203.8 billion won (its first quarterly profit in seven quarters), LG Energy Solution posted 113.3 billion won (turning profitable from the previous quarter), and SK On achieved 821.8 billion won (a record quarterly performance including compensation from the Ford joint venture liquidation).
How did Korean battery stocks perform year-to-date compared to the KOSPI index?
Through the previous close compared to year-end, Samsung SDI's stock increased 55.65%, SK Innovation rose 9.98%, and LG Energy Solution declined 10.85%. During the same period, the KOSPI index increased 50.89%, meaning Samsung SDI outperformed while the other two stocks underperformed the broader index.
What is the Korean government's domestic production promotion tax system for the battery industry?
The Korean government announced a domestic production promotion tax system (Korean IRA) that will provide tax reductions proportional to production volume for six strategic industries including secondary batteries, semiconductors, and artificial intelligence (AI).
