Investment highlights
The earnings surprise for 1Q20 reaffirms LG Chem's (LGCLF) strong fundamentals across all divisions. Chemical and battery margins came in higher than estimates. Advanced materials also turned to profit. We forecast battery earnings will continue growing every quarter, with EV batteries expected to hit BEP in 3Q20. Battery cell makers look more attractive than component manufacturers as an investment. We raise our target price to KRW500,000. We continue to present the company as our top pick while adding it to our Conviction Call list.
Major issues and earnings outlook
For 1Q20,