(1) The increasing possibility of Magna International (Magna: MGA) entering a contract manufacturing partnership with Apple to manufacture electric vehicles (named “Apple Car”) means potential business expansion for LGE’s JV with Magna, a business engaged in the manufacture of EV parts (LG-Magna e-Powertrain), is more likely.
(2) The restructuring of the Mobile Communications division (expected in 1H21) would likely remove uncertainty over the strain that the loss-making business has put on earnings.
(3) An earnings surprise expected in 1Q21 should alleviate earnings concerns.
Focus on Magna CEO’s first official comment regarding Apple Car manufacturing
At a recent Society of Automotive Analysts event, CEO Swamy Kotagiri of Magna International—North America’s No. 1 and the world’s third-largest automotive component maker—announced that his company is ready and willing to build a vehicle for Apple via the ramp-up of North American facilities if investments are guaranteed under contract terms. We believe attention should be paid to this first official comment regarding Apple Car manufacturing by Magna, which is currently in contract CBU manufacturing partnerships with global auto giants such as Mercedes Benz, BMW and Toyota. We believe his expression of confidence lies in the fact that e-motors and inverters—essential EV parts—can be procured through the LG-Magna JV.
1Q21E OP of KRW1.5tn to be positive earnings surprise