Welcome to Daily Stock's KOSPI Story. Today, we bring you the market's key trends and the latest dynamics of the leading battery stock.
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Key Summary
As of May 26, 2026, the KOSPI recorded 8,047.51, showing a bullish trend centered on large-cap stocks, but the high exchange rate of 1,502.50 won is acting as a double-sided variable for the market.
Amid this macro environment, LG Energy Solution (373220), the top domestic secondary battery stock, is undertaking structural improvements by significantly raising its Energy Storage System (ESS) shipment guidance to respond to the EV chasm (temporary demand stagnation).
In particular, the volatility of the Advanced Manufacturing Production Credit (AMPC) confirmed in Q1 earnings and the status of new orders for 46-series cylindrical batteries are evaluated as key indicators that will determine the direction of foreign supply and demand going forward.
According to Daily Stock's proprietary Fear & Greed Index, the KOSPI is currently in a Neutral (58.1) state, slightly cooling down from the Greed (64.8) zone a month ago, making it highly likely that a selective market driven by earnings will unfold.
Current Situation Summary
Based on today's (26th) closing, the KRW/USD exchange rate stands at 1,502.50 won, maintaining a super-strong dollar trend, which can act favorably for the price competitiveness of large Korean export stocks.
However, for secondary battery cell makers like LG Energy Solution, shipment volatility has increased as conservative inventory management by major automaker clients overlaps with an all-around slowdown in global EV demand.
Foreign supply and demand, which is leading the KOSPI's stabilization above the 8,040 level, is currently concentrated on large-cap semiconductor and financial stocks, while a wait-and-see attitude is analyzed to be dominant in the secondary battery sector.
In response, LG Energy Solution is aggressively increasing ESS shipments in Europe and North America, led by a large-scale project with the Polish Power Group (PGE), to defend against the void in the EV sector.
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Financial Analysis
LG Energy Solution's confirmed earnings for the first quarter of 2026 recorded 6.555 trillion won in revenue and 207.8 billion won in operating loss, shocking the market with a swing to deficit.
This is the result of a decrease in EV battery shipments due to the temporary suspension of the North American joint venture (JV) operations and the initial ramp-up costs for converting production lines to ESS acting as a one-off burden.
In particular, even though 189.8 billion won of the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) was reflected in the operating profit, it could not avoid a deficit.
If the AMPC effect is excluded, the actual Q1 operating loss expands to approximately 397.5 billion won, exposing a structural vulnerability.
| Category (Unit: 100 Million KRW) | Q1 2026 Earnings | Q4 2025 Earnings | QoQ Change | Q1 2025 Earnings |
|---|---|---|---|---|
| Revenue | 65,550 | 64,743 | +1.2% | 67,227 |
| Operating Profit (Loss) | -2,078 | -1,220 | Deficit Expansion | 3,747 |
| AMPC Reflected Amount | 1,898 | - (Accounting standard change) | - | 4,577 |
| Operating Profit Excl. AMPC | -3,975 | Unconfirmed | - | -830 |
※ Some data may include unconfirmed daily quotes (based on the latest confirmed values) and should be used for reference purposes only.
Valuation
Despite the recent overall multiple de-rating trend in the EV sector, LG Energy Solution is defending its valuation downside through a next-generation form factor called the 46-series cylindrical battery.
In the first quarter of this year alone, it achieved over 100GWh of new orders, pushing its total order backlog beyond 440GWh, which can be a strong basis for long-term cash flow (EBITDA) improvement.
In addition, if the guidance to raise the ESS portion to the mid-30% range of company-wide revenue within the year materializes, the profit structure, which had been heavily concentrated on mobility, is expected to diversify.
However, in the current high exchange rate phase of the 1,500 won range, there is a possibility that the financial burden of foreign currency debt repayment and investment funding when executing large-scale overseas capital expenditures (CAPEX) will act as a discount factor.
Expert/Institutional Analysis
Major domestic securities firms have mixed views on the possibility of LG Energy Solution's earnings turnaround in the second half of this year, but many forecast that the overall direction will trend upward.
The prevailing atmosphere is that management's decision to convert some lines at the Arizona and Tennessee plants in the U.S. for ESS use is evaluated as a realistic countermeasure to overcome the EV demand cliff.
Some institutions expect that the capacity utilization rate will reach a normal track if shipments of Europe-bound Lithium Iron Phosphate (LFP) batteries and mid-nickel-based mid-to-low-priced lineups expand starting in the second quarter.
With the Nasdaq index also recently reaching 26,343.97 and maintaining investor sentiment, analysts believe the time may be approaching for the company's form factor competitiveness, spearheaded by the 46-series, to be highlighted.
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Risk Factors
The biggest potential risk is policy changes related to U.S. tax credits, particularly the gradual raising of standards for excluding Chinese supply chains following the enactment of the OBBBA (Tax Cuts and Fiscal Bill).
If the specific percentage requirements for battery components and minerals are not met, the AMPC receipt amount could plummet, directly leading to a scenario of damaged operating profits.
There is also a macroeconomic burden that upward pressure on imported raw material prices may intensify as the Bank of Korea's delay in interest rate cuts coincides with the super-strong dollar in the 1,500 won range.
If the global EV market, a downstream industry, fails to turn around to a meaningful recovery trend in the second half of 2026, there remains a possibility that the increase in ESS shipments alone will be difficult to cover the entire fixed cost burden.
Investment Perspective Summary
LG Energy Solution's current situation can be interpreted as a transition period in which it is crossing the valley of the EV chasm using ESS as a new driving force.
Therefore, rather than short-term profit momentum, it is important to check the delivery schedule of ESS projects in North America and Europe, as well as the ability to defend the AMPC receipt amount.
Considering that the KOSPI is currently in a large-cap-driven market crossing the 8,047 level, it is necessary to watch for the timing when foreign investors' spot and futures supply and demand rotate into secondary batteries.
Ultimately, the timing when the full-scale mass production of the 46-series cylindrical batteries in the second half of 2026 coincides with exchange rate stabilization is expected to be the core scenario for a mid-to-long-term rebound.
Frequently Asked Questions
Q1. How were LG Energy Solution's Q1 2026 earnings?
A1. It recorded 6.555 trillion won in revenue and 207.8 billion won in operating loss, shifting to a deficit. This figure includes 189.8 billion won from the North American subsidy (AMPC), heavily impacted by the decline in EV battery shipments.
Q2. What are the changes in shipment guidance to overcome the poor earnings?
A2. The company is significantly increasing the shipment proportion of Energy Storage Systems (ESS) from its previous EV-centric focus. It has set a goal to expand the ESS revenue portion to the mid-30% range or higher of the company-wide revenue within the year.
Q3. What is the 46-series battery, and what is the current order status?
A3. It is a next-generation cylindrical battery with a diameter of 46mm, featuring increased energy density and output. In the first quarter of this year alone, it achieved over 100GWh of new orders, bringing the total order backlog to over 440GWh.
Q4. What is the impact of the 1,500 won exchange rate situation on LG Energy Solution?
A4. An increase in the KRW/USD exchange rate has the positive aspect of raising the KRW-converted export unit price, but since massive foreign currency is needed for large-scale overseas production plant (CAPEX) investments, it can act as a risk factor in terms of financing and debt management.
Q5. Is the outlook for the North American Advanced Manufacturing Production Credit (AMPC) secure going forward?
A5. The system is maintained, but monitoring whether the receipt requirements can be continuously met is essential, as the conditions for excluding supply chains involving Foreign Entities of Concern (FEOC) are becoming increasingly strict, such as with the enactment of the OBBBA.
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■ Daily Stock Proprietary Fear & Greed Index (As of 2026-05-26)
- KOSPI Fear & Greed: Current Neutral (58.1), 1 Week Ago Neutral (58.9), 1 Month Ago Greed (64.8), 3 Months Ago Greed (63.4)
- NASDAQ Fear & Greed: Current Neutral (58.6), 1 Week Ago Greed (63.2), 1 Month Ago Greed (68.5), 3 Months Ago Greed (66.8)