Kim Hyun-soo

Samsung SDI is the second-mover in LFP conversion for ESS, starting production this year after LG. It is outperforming as the next major beneficiary of ESS growth and AMPC benefits, with 20-30% upside based on three-year forward valuation on secured orders.

LG Energy Solution is the best-positioned large-cap cell maker because it was the fastest to convert to LFP for ESS, and its US production subsidies (AMPC) are doubling, leading to the largest EPS growth in the sector this year. ESS demand is structurally driven by energy security and grid needs, not just environmental policy.

Samsung SDI is the top pick in the battery sector. The cancellation of the GM JV removes capex burdens, and selling its Samsung Display stake secures cash for ESS expansion. As data centers increasingly require off-grid power, ESS demand is surging, shifting the growth narrative away from the sluggish EV market.

Around the US midterm elections the battery sector should be positioned well; if Democrats win, the market will treat Korean battery names as beneficiaries of a Trump policy unwind, adding stock-price upside. He does not expect Democrats to restore the old green wave or aggressive EV subsidies, but energy-security-driven renewable and ESS support should continue.

The Korean battery/ESS sector is entering a multi-year growth phase because EV battery weakness is already reflected, while ESS demand is being created by AI data-center self-generation requirements, energy security policy, and US federal/state moves toward off-grid power. North America ESS demand is about 70-80GW before hyperscaler self-generation, the market is growing 20-30% annually, Chinese share is being replaced by Korean makers, and the sector's low base supports higher earnings growth than semiconductors next year.

Panasonic's stock has remained strong because the company kept EV battery capacity expansion minimal during the EV boom, avoiding fixed-cost and oversupply pressure, and its battery business, especially Tesla supply, continues to support the shares.

POSCO Holdings benefits from rising lithium prices because it directly owns lithium brine and mines in South America. Lithium price strength is supported by robust demand and Chinese supply restrictions. It is the main domestic lithium beneficiary.

Hanjung NCS, which makes ESS cooling systems, is a small-cap beneficiary within the ESS theme. It was widely included in KOSDAQ secondary battery ETFs and continues to show strong momentum as ESS demand accelerates.

Albemarle (ALB) is a pure-play lithium miner with direct ownership of brine and hard-rock assets. The structural lithium upcycle (demand growth plus Chinese supply tightening) makes it a strong beneficiary, and its stock has been performing very well.