---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 183905
conversation_id: 77ba281d-570b-4adc-afe4-89d49a1d3a4e
citations: 0
created: 2026-05-31 19:47:11Z
---

# How does LG Energy Solution’s valuation compare to peers, and what justifies its premium/discount?

## LG Energy Solution (373220 KS) — Valuation vs Peers

CLSA's most recent global battery-manufacturer comp sheet (priced 19 May 2025) is the cleanest like-for-like reference in internal research [1]. It shows LGES screening as the most "expensive" headline name in the group on earnings-based multiples but mid-pack on book value, with peer-worst returns. CLSA's call is **Underperform, ₩330,000 TP** (vs spot ₩290,500 at the 16-May transfer note) [2].

### Headline comp table — CLSA, priced 19 May 2025 [1]

| Company | Ticker | Mkt cap (US$bn) | PE 2025 | PE 2026 | EV/EBITDA 2025 | EV/EBITDA 2026 | PB 2025 | ROE 2025 | ROE 2026 | Div yld 2025 |
|---|---|---:|---:|---:|---:|---:|---:|---:|---:|---:|
| **LG Energy Solution** | **373220 KS** | **49.1** | **240.9** | **54.4** | **17.1** | **12.0** | **3.1** | **1.7** | **5.8** | **0.0** |
| Samsung SDI | 006400 KS | 8.7 | 41.7 | 10.4 | 10.4 | 6.7 | 0.6 | 1.6 | 5.6 | 0.6 |
| Panasonic | 6752 JP | 27.3 | 11.7 | 10.7 | 5.6 | 5.3 | 0.8 | 6.9 | 7.3 | 2.5 |
| CATL-A | 300750 CH | 158.7 | 17.7 | 14.6 | 9.7 | 7.6 | 3.9 | 23.0 | 23.5 | 2.4 |
| BYD-H | 1211 HK | 164.2 | 21.9 | 18.2 | 8.1 | 6.5 | 4.9 | 24.3 | 23.6 | 1.3 |
| BYD-A | 002594 CH | 164.2 | 20.8 | 17.0 | 8.0 | 6.2 | 4.7 | 24.2 | 23.7 | 1.3 |
| EVE Energy | 300014 CH | 12.9 | 17.3 | 13.3 | 12.4 | 9.5 | 2.2 | 12.9 | 15.2 | 1.3 |
| Gotion | 002074 CH | 5.8 | 29.5 | 21.5 | 14.8 | 12.6 | 1.5 | 5.2 | 6.5 | 0.8 |
| Sunwoda | 300207 CH | 5.0 | 16.1 | 13.1 | 10.0 | 8.5 | 1.4 | 8.6 | 9.5 | 1.3 |
| CALB | 3931 HK | 3.9 | 17.9 | 12.7 | n/a | n/a | 0.8 | 3.8 | 5.2 | 0.1 |
| **Peer average** | | | **46.4** | **19.0** | **10.8** | **8.4** | **2.2** | **9.9** | **11.4** | **1.0** |

### Where LGES is at a premium

- **EV/EBITDA: ~58% premium to peer set** — 17.1x 2025 vs the 10.8x peer average and 12.0x 2026 vs 8.4x peer average [1]. Even the closest comp Samsung SDI (10.4x / 6.7x) trades materially cheaper.
- **PE: optically extreme** — 240.9x 2025 / 54.4x 2026 vs peer averages of 46.4x / 19.0x [1]. This is a denominator problem (depressed earnings, not numerator strength) — see "what justifies it" below.
- **Versus pure-CATL (the only larger-scale "leader"):** LGES trades at a ~60% EV/EBITDA premium on 2026 (12.0x vs CATL-A's 7.6x) despite CATL having 4× the ROE [1].

### Where LGES is at a discount

- **PB: 3.1x — below CATL-A (3.9x) and BYD-A/H (4.7–4.9x)** [1]. So on capital-intensity-adjusted measures, LGES is mid-pack, not premium. The market is not assigning it a Chinese-leader-style book multiple.
- **Dividend yield: 0.0%** — the only zero in the group, reflecting the AMPC-dependent earnings profile [1].

### What justifies the premium (the bull case CLSA acknowledges)

1. **Pure-play scarcity premium.** LGES is "largely a pure EV battery play" with no diluting electronic-materials or auto-OEM segment — CLSA itself uses a DCF rather than a peer-multiple SOTP because there is no clean comp [3]. Investors pay for unmixed exposure.
2. **2025 is a trough-earnings year being absorbed in the multiple.** ROE of just 1.7% in 2025 normalising to 5.8% in 2026 [1]. The 240.9x → 54.4x PE compression mirrors a >4× earnings rebound being priced in — the headline 2025 PE is not a "premium" investors are paying, it is a placeholder over near-zero EPS.
3. **AMPC optionality.** LGES's US manufacturing footprint earns IRA Advanced Manufacturing Production Credits. CLSA explicitly excludes AMPC from NOPAT and credits it back at a 50% discount for policy risk [3]. A bull who underwrites AMPC at face value sees the multiple as deceptively cheap.
4. **Sector-rotation flow.** CLSA's own listed upside risk is "sector rotation flows (given the underweight status of batteries) along with strong EV demand (20%+) in 2025" — i.e., positioning, not fundamentals, can support the multiple [5].

### What justifies the discount / why CLSA is Underperform (the bear case)

1. **Returns gap is structural, not cyclical at this comp.** LGES's 2026 ROE of 5.8% [1] sits roughly a quarter of CATL/BYD's 23–24% [1] — paying CATL-like EV/EBITDA for one-quarter of CATL's return-on-capital is hard to defend without a major margin inflection.
2. **Consensus operating profit looks too high.** CLSA's core thesis is that "despite risks surrounding slower EV penetration and EV delivery delays being more or less priced in, we continue to see risks with regard to 2025 consensus OP… the negatives are not fully priced in" [4]. The premium multiple is sitting on numbers CLSA expects to be cut.
3. **AMPC is a policy bet, not earnings.** Stripping AMPC and discounting it 50% is what produces an Underperform call rather than a Hold [3] — if you mark AMPC to lower realisations (US policy U-turn risk), the implied multiple inflates further.
4. **PB validation.** That LGES sits at 3.1x PB while CATL/BYD command 3.9–4.9x [1] shows the market is *already* applying a stealth discount on the asset base — investors are paying CATL-like cash-flow multiples but refusing CATL-like book multiples, which is internally consistent with "high multiple, depressed earnings, suspect normalisation".
5. **Read-across from CATL benchmark.** CLSA's own SOTP for CATL applies 12x 2026 EV/EBITDA — and describes that as a **50% premium versus the 8x at which global battery manufacturing peers (the LGES cohort) currently trade** [6]. In other words, **8x 2026 EV/EBITDA is the implied "fair" peer-multiple anchor — LGES at 12.0x is already trading where CATL deserves to trade**, despite vastly inferior returns [1][6].
6. **Samsung SDI peer-comp anchor confirms.** CLSA's SOTP for SDI uses **5.3x EV/EBITDA on the battery business as the peer-comp multiple** for 2026 [7]. LGES at 12.0x 2026 EV/EBITDA is 2.3× that anchor.

### Net assessment

The premium on LGES is **real on EV/EBITDA (~50–60% above the peer set on 2026 numbers)** and **optical on PE (driven by trough 2025 earnings)** [1]. It is justified ONLY if (a) AMPC is underwritten at close to face value and (b) 2026 EPS recovers as consensus expects. CLSA dismisses both — hence Underperform with TP ₩330,000 [2], a valuation that effectively re-rates LGES toward the 8x 2026 EV/EBITDA peer anchor [6] after AMPC is discounted by 50% [3]. The bull case is a pure-play scarcity premium plus a sector-rotation tailwind into an underweight battery space [5]; the bear case is that LGES is paying CATL/BYD multiples for one-quarter of their returns, with the support beam (AMPC) exposed to US policy risk [1][3][4].

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**Sources**
[1] Valuation comps – CATL vs battery manufacturing peers table — CLSA, "CATL – A new era" (20 May 2025) — 607959766LinqAlpha.PDF
[2] LG Energy Solution / Samsung SDI rating, current price, TP table — CLSA, "Korea EVs (Transfer of coverage)" (16 May 2025) — 607959725LinqAlpha.PDF
[3] LGES valuation methodology (DCF, AMPC at 50% discount) — CLSA, "Korea EVs (Transfer of coverage)" (16 May 2025) — 607959725LinqAlpha.PDF
[4] LGES investment thesis (downside to 2025 consensus OP) — CLSA, "Korea EVs (Transfer of coverage)" (16 May 2025) — 607959725LinqAlpha.PDF
[5] LGES investment risks (sector rotation + 20%+ EV demand upside) — CLSA, "Korea EVs (Transfer of coverage)" (16 May 2025) — 607959725LinqAlpha.PDF
[6] CATL SOTP valuation rationale (12x 26CL EV/EBITDA = 50% premium vs 8x global battery peers) — CLSA, "CATL – A new era" (20 May 2025) — 607959766LinqAlpha.PDF
[7] Samsung SDI SOTP – 5.3x battery / 4.8x electronic materials peer-comp multiples — CLSA, "Korea EVs (Transfer of coverage)" (16 May 2025) — 607959725LinqAlpha.PDF

Note on corpus recency: latest CLSA notes touching LGES in this archive are dated 11–29 Jun 2025, but the substantive peer-comp tables and LGES-specific valuation framework come from the 16–20 May 2025 transfer-of-coverage and CATL "A new era" notes above. Earnings/share-price data here are priced 19 May 2025.

