On January 27, LG Energy Solution (LGES), a South Korean battery manufacturer, went public on the Korean Exchange at 9:00 a.m. local time (8:00 a.m. Beijing time), raising KRW 12.75 trillion (approximately RMB 67 billion) in the largest IPO in Korean history.
Institutional investors subscribed for LG’s new energy more than 1,500 times over. As the world’s second-largest listed company in 2021, second only to Rivian (RIVN.US), its size is approximately 2.5 times that of Samsung Life Insurance, which has held the largest IPO in Korean history.
LGES was spun off from LG’s chemical battery business and started independent operation at the end of last year. Its major clients include Tesla, General Motors, and other automakers. Following this public offering, LG Chemical will still hold 81.8% of LGES’s shares. According to SK Securities, LG Energy was in a deficit position in 2019 and 2020. Currently, it is predicted that LG Energy’s operating profit margin for 2021 will be 5.9%, about half of CATL’s expected 12.5%.
At a previous press conference, LGES CEO Kwoun Young-sod said that with a more diverse user base, more backlogged orders, and richer patented technology, LGES will surpass CATL to become the world’s top battery leader. From January to November this year, LGES’s installed battery capacity was 51.5 GWh, with a market share of 20.5%. CATL, as the current industry leader, had installed battery capacity of 79.8 GWh, and a market share of 31.8%. As of the close of January 26, CATL’s market value was RMB 1.37 trillion.
In recent years, the electric vehicle market has become increasingly hot. In just the past year of 2021, the penetration rate of new energy vehicles in China has exceeded 20%, and the trend of new energy vehicles worldwide is also surging. The “new energy” batteries on new energy vehicles are the heart of the trend, and even the biggest bottleneck in the development of electric vehicles. It is foreseeable that the competition in the battery field will be more intense in the next few years, and the future performance of LEGS is worth looking forward to.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.