Korea Battery & Battery Materials: Key takeaways from our Asia marketing trip

Investor feedback from our Asia marketing trip was more positive on battery cell makers than on cathode suppliers. Most investors agreed Samsung SDI's earnings trajectory is improving on multiple pillars: BBU/UPS becoming more meaningful, stronger Korea ESS policy support, and durable US ESS demand with potential share gains versus Chinese competitors. The main pushback was valuation: many see a clearer “US ESS boom” as necessary for a re-rating, anchoring closer to ~200GWh of US demand by 2030 versus our ~300GWh estimate, and highlighting US midterm election sensitivity to a pro-renewables policy mix. Battery materials positioning remains heavily short, with incremental LGES LFP orders the key watch item. PFM is viewed as best positioned on LFP visibility and NCM/NCA conversion optionality, L&F next-best but with competition/financing concerns, and EBM least supported. We continue to prefer battery makers (SDI/SKI/LGES all OW) over cathode suppliers (L&F N; PFM/EBM UW).