Global Energy Storage: Korean 3Q Preview - AIDC demand supports margin recovery

Korean battery makers are due to report 3Q26 earnings, and 2026 appears to be a turning point as stronger ESS and AIDC demand offsets weakness in EV batteries, supporting higher shipments, utilization and margins. LGES's preliminary 3Q results (revenue ex-AMPC of KRW9.2tn, operating profit ex-AMPC of KRW339bn, 3.7% margin) show profitability recovering faster than expected, with the margin seen rising to 5.3% in 4Q. For Samsung SDI we forecast 3Q26 revenue ex-AMPC of KRW4.2tn and operating profit ex-AMPC of KRW170bn (4.0% margin, above consensus of 1.3%), improving to 4.8% in 4Q and KRW266bn for FY26. SDI has greater US and ESS exposure (about 8GWh of US shipments out of 13GWh globally) and a lower 2027 EV/EBITDA multiple, giving it more leverage to the storage and AI data center theme. We raise target prices to KRW560,000 for SDI and KRW403,000 for LGES but retain Market-Perform on both, as a meaningful earnings recovery is already priced in;