Our W250k target price for L&F is based on our DCF methodology to capture the strong growth potential in the long term. Key assumptions are: a ~5-6% normalized EBIT margin (vs. ~7-8% for peers on lower integration), a 2% terminal growth rate and a 9.5% WACC (from 10% on interest rate cycle peaking. Our target price implies ~20x 2025E EV/EBITDA.

Our quantitative risk model assigns a High Risk rating to the stock. Key downside risks that could impede the shares from reaching our target price include: 1) slower-than-expected yield ramp-up for new plants; 2) heightened competition from Chinese battery players and significant shift from NCM into LFP chemistry; 3) slower global EV sales; 4) potential market share loss as other Korean peers catch up on high-nickel technology. Key upside risks include: 1) more favourable government policies to promote EV sales; 2) stronger sales growth; 3) significant delay or quality issues for peers' capacity expansion.