Nomura NIFA takeaways: Korean cathode material companies are pursuing differentiated growth in Europe, U.S. ESS, and LFP

Overview

This report is a conference takeaways note published by Nomura after the Nomura Investment Forum Asia 2026 held in Singapore from June 2 to 5, 2026, focusing on Korean battery cathode material companies LG Chem, L&F, and Ecopro BM. The report argues that the three companies are pursuing different strategic paths to achieve growth and profitability improvement: Ecopro BM relies on high-nickel cathode capacity in Hungary, a localized supply chain in Europe, and integration of Indonesian nickel resources; L&F is advancing the first wave of LFP cathode commercialization in Korea and entering the U.S. ESS market; LG Chem is improving returns through North American battery volume ramp-up, 2170 cell supply, LFP preparation, optimization of its LGES stake, and restructuring of its chemical business.

Core views

The core views include: first, the return of EV subsidies in Europe and local supply chain regulatory requirements are favorable for ramp-up at Ecopro BM's Hungary plant and its high-nickel cathode positioning; second, if L&F's LFP business begins commercialization in 3Q26E as planned, it could become a key beneficiary of U.S. ESS growth, though customer concentration, additional capex, and technical difficulty still warrant attention; third, LG Chem's cathode shipments are expected to recover in 2H26E alongside the ramp-up of battery production in North America, while management aims to improve shareholder returns through ROE-linked evaluation, monitoring of the NAV discount, reducing its LGES stake to 70%, and integrating NCC capacity; fourth, high nickel, LFP, solid-state battery materials, and upstream nickel integration will jointly determine the medium-term competitive positioning of Korean cathode material companies.

Analysis framework

The report mainly uses management meeting takeaways, capacity and shipment forecasts, judgments on customer and end-demand trends, technology route comparisons, and DCF or SOTP valuation frameworks to analyze the growth drivers, earnings recovery paths, and key risks of the three cathode material companies.

Methodology notes

• Meeting takeawaysNIFA 2026 management meeting takeaways

  Management discussion summary

  Through discussions with LG Chem, L&F, and Ecopro BM during NIFA, the report extracts the latest changes in each company's capacity, customers, technology roadmap, and capital return strategy.

• Valuation methodsDCF

  Discounted cash flow valuation

  The report applies DCF valuation to some companies, with key assumptions including capacity, shipment growth, ASP decline, EBIT margin, WACC, and long-term business mix.

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  LG Chem's target price uses an SOTP framework, breaking down the value of chemicals, batteries, advanced materials, crop protection, and pharmaceuticals, while applying a discount to its LGES stake.

• Rating systemNomura equity research rating system

  Relative rating

  Nomura's Buy means the analyst expects the stock to outperform its benchmark over the next 12 months; the target price reflects the analyst's assessment of current intrinsic fair value based on an appropriate valuation method.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LG Chem (051910 KS)

  Key covered company, rated Buy, target price KRW440,000

  Strengths

  Ramp-up of battery production in North America and supply of 2170 cells are expected to drive recovery in cathode shipments in 2H26E; management focuses on ROE, NAV discount, LGES stake optimization, and chemical restructuring.

  Weaknesses

  Current cathode utilization is relatively low; the chemicals business faces industry oversupply and weak ethylene economics; it lags competitors at a leading EV OEM customer.

  Comparison

  Compared with L&F and Ecopro BM, LG Chem has a more diversified business portfolio, combining battery materials improvement with chemical asset restructuring and shareholder return enhancement.

  Risks

  Further weakening in chemical margins, restructuring execution falling short of expectations, or North American battery demand or capacity ramp-up coming in below expectations.

• L&F (066970 KS)

  Key covered company, rated Buy, target price KRW200,000

  Strengths

  2026F shipments are expected to increase 19% YoY to 80k tonne; 60ktpa of LFP capacity in Korea will be commercialized in phases; initial supply will go to Samsung SDI's U.S. ESS business and may benefit from rapid U.S. ESS growth.

  Weaknesses

  Revenue is highly dependent on LG Energy Solution and its end customer Tesla; overall LFP profitability may be lower than that of high-nickel cathodes; customer expansion may require additional capex.

  Comparison

  Compared with Ecopro BM's European high-nickel and solid-state route, L&F is more focused on LFP, U.S. ESS, and customer diversification; compared with LG Chem, its business is more concentrated in cathode materials.

  Risks

  Weak earnings in 1H26, failure to secure meaningful cathode contracts, or slower-than-expected progress in LFP commercialization or precursor-free LFP technology.

• Ecopro BM (247540 KS)

  Key covered company, rated Buy, target price KRW280,000

  Strengths

  Its 54k tpa capacity in Hungary is a growth driver for Europe; its high-nickel cathode product mix fits European EV demand and local supply chain requirements; Ecopro Group strengthens upstream integration through stakes in Indonesian nickel smelting.

  Weaknesses

  The near-term key issue is successful ramp-up of the Hungary plant; the company's priorities are more focused on high nickel, solid-state cathodes, and nickel smelting expansion rather than LFP investment.

  Comparison

  Compared with L&F's LFP and U.S. ESS route, Ecopro BM is more focused on European high nickel, solid-state battery materials, and upstream metal integration.

  Risks

  Hungary ramp-up falling short of expectations, customer contract cancellations, or an excessive focus on high-nickel and solid-state routes causing it to miss LFP demand.

• LG Energy Solution (373220 KS)

  LG Chem's equity holding asset and L&F's main customer; the report discloses a Buy rating and target price of KRW600,000

  Strengths

  North American battery production ramp-up supports recovery in LG Chem's cathode shipments; L&F expects about 85% of revenue to come from LG Energy Solution, with Tesla as one of the end customers.

  Weaknesses

  The report discusses it more as a customer and equity holding asset than as a standalone operating analysis.

  Comparison

  Within the industry chain, it is positioned in battery manufacturing and is an important downstream channel through which demand is transmitted to cathode material companies.

  Risks

  Unexpected impairment-related costs, weaker-than-expected demand, or changes in assumptions for AMPC and capacity expansion.

• Samsung SDI (006400 KS)

  Initial customer for L&F's LFP cathodes; the report mentions its U.S. ESS battery business

  Strengths

  Expansion of its U.S. ESS footprint could drive demand for L&F's LFP products.

  Weaknesses

  The report does not provide an independent rating, target price, or detailed financial analysis for Samsung SDI.

  Comparison

  Compared with LG Energy Solution, Samsung SDI appears in this report mainly as an ESS customer for L&F's LFP commercialization.

  Risks

  U.S. ESS demand, capacity expansion pace, or execution of long-term supply agreements may come in below expectations.

Key data

• Report date2026-06-08The NIFA 2026 conference was held in Singapore from June 2 to 5, 2026.
• Covered companies and ratingsLG Chem (051910 KS, Buy), L&F (066970 KS, Buy), Ecopro BM (247540 KS, Buy)All three companies participated in NIFA 2026.
• Ecopro BM cathode capacity244k tpa in total, including 54k tpa in HungaryThe first Hungary production line is planned to start in June 2026, and the second line is expected to begin in 2H26E.
• Ecopro Group nickel resourcesAround 10% stakes in Indonesian nickel smelters, with combined capacity of 150k tpaEcopro Group is evaluating a second-phase investment.
• L&F 2026F shipments80k tonne, up 19% YoYThe report expects about 85% of revenue to come from LG Energy Solution, with end customers including Tesla.
• L&F LFP commercialization60ktpa LFP capacity in Korea, of which 30ktpa is expected to be commercialized in 3Q26E and the remaining 30ktpa in 1H27EInitial products will supply Samsung SDI's U.S. ESS battery business.
• L&F LFP price assumptionASP USD11/kgManagement is optimistic about the profit outlook for LFP cathodes, but the report believes overall profitability may still skew more toward high-nickel cathodes.
• LG Chem cathode recovery milestoneFaster shipment recovery in 2H26E, with mass production of 2170 cell supply beginning in 3Q26EThe recovery is supported by the ramp-up of battery production in North America.
• LG Chem shareholder return measuresPlans to reduce its stake in LG Energy Solution to 70% over the next five yearsAt the same time, management compensation metrics will be linked to indicators such as ROE, and the NAV discount will be monitored at the board level.
• LG Chem chemical restructuringPlans to integrate about 4.0mn tonne of NCC capacity and shut down about 1.0mn tonneThe goal is to address industry oversupply and weak ethylene economics while achieving meaningful cost reductions.
• Target priceLG Chem KRW440,000; L&F KRW200,000; Ecopro BM KRW280,000; LG Energy Solution KRW600,000Valuation methods include DCF and SOTP; the extracted text does not provide the corresponding current share prices.

Impact & implications

For investors, opportunities in the Korean cathode material chain are no longer limited to a single EV demand recovery theme, but are diverging into localized high-nickel supply in Europe, LFP volume ramp-up for U.S. ESS, battery capacity ramp-up in North America, and valuation recovery driven by chemical asset restructuring. Ecopro BM is better positioned to benefit from European high nickel and upstream nickel integration, L&F from U.S. ESS and LFP customer expansion, and LG Chem from a combined improvement path of materials volume ramp-up, LGES stake optimization, and cost reduction in its chemical business.

Risks

• There are execution risks around ramp-up at Ecopro BM's Hungary plant, the shift of the third line to NCM, and realization of European local supply chain opportunities.
• L&F's LFP commercialization may be affected by technical difficulty, customer expansion, additional capex, and LFP profitability being lower than that of high-nickel cathodes.
• L&F's revenue is concentrated in LG Energy Solution and Tesla end demand, implying high customer concentration.
• LG Chem's chemicals business may continue to be affected by industry oversupply, weak ethylene economics, and weakening chemical margins.
• LG Chem's North American battery capacity ramp-up, 2170 cell supply, and LFP commercialization timeline may fall short of expectations.
• Achievement of target prices may be affected by macro market conditions, weaker-than-expected demand, asset impairments, contract cancellations, or earnings deviating from estimates.

What to watch

• The quality of ramp-up after Ecopro BM's first Hungary production line starts in June 2026 and the second line begins in 2H26E.
• The recovery of EV subsidies in Europe, policy changes in the UK and Germany, and the pull from European local supply chain regulation on demand for high-nickel cathodes.
• L&F's first 30ktpa LFP commercialization in 3Q26E, the remaining 30ktpa coming online in 1H27E, and execution of Samsung SDI's U.S. ESS orders.
• Progress in L&F's precursor-free LFP, sodium batteries, and potential expansion into EV applications.
• LG Chem's recovery in cathode shipments in 2H26E, mass production of 2170 cell supply in 3Q26E, and preparation for LFP commercialization in 2027-28E.
• The pace of LG Chem reducing its LGES stake to 70% over the next five years, and the execution impact of NCC capacity integration and the 1.0mn tonne shutdown plan.
• Second-phase investment in Indonesian nickel smelting and progress in Ecopro Group's upstream metal integration.