LG share is undervalued after the split
LG share is undervalued after the split
  • 이동훈 기자
  • 승인 2021.06.21 14:24
  • 최종수정 2021.06.21 13:51
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Shinhan Financial Investment maintained its investment opinion of 'Buy' and target stock price of 125,000 won for LG.

Kim Soo-hyun, a researcher at Shinhan Investment, said, "It is an excessive undervaluation phenomenon after LG and LX Holdings were re-listed."

Researcher Kim said, "The discount rate to the listed subsidiaries of LX Holdings, which is separated from its affiliates, is 22%, while LG's discount rate is 59%, excluding LG's operating value and unlisted value."

"The 59% discount rate is too high for asset value," he added.

Rather, researcher Kim analyzed that through the separation of the affiliates, LG will be able to focus its capabilities and resources on electronic, chemical and telecommunication services at the same time as selling non-core businesses.

"It is expected that growth engines such as batteries, large OLEDs, and automotive battlefields will be able to be advanced," he said. "It is believed that LG Chem's share price decline has also been largely reflected."

"It is estimated that LG Chem is currently trading at a 37% discount from its operating value and value after listing its energy solution," he said. " Therefore, concerns over listing LG Energy Solution are fully reflected in LG's stock price."

Researcher Kim suggested ways to swap shares and use cash as major shareholders of LG Electronics.

"In the future, Chairman Koo Kwang-mo's 15.95% stake in LX and Chairman Koo Bon-joon's 7.72% stake in LG are expected," he said. "There is a perception in the market that the former swap stock price is weak, but the current stock price is already excessively low."

"We are also the only listed holding company with more than 1 trillion won in net cash," he added.

"We recommend buying low-priced installments as we expect to communicate with the market on various forms of cash utilization measures such as special dividends, shareholder returns, and M&A in the future," he said.

Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com 


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