[Click eStock] "LS Jeonseon, Corporate Value to Rise Further... Target Price Raised"

Meritz Securities raised the target price for LS Cable & System from 150,000 KRW to 190,000 KRW on the 17th, citing an upward revision of the company's value. The investment rating was maintained as 'Buy.'

Jang Jae-hyuk, a researcher at Meritz Securities, explained in a report on the same day, "The factors affecting the change in net asset value (NAV) are the upward revision of LS Cable & System's corporate value and the increase in market value of LS Electric." He added, "Following the upward revision of earnings consensus and multiples for global and domestic submarine cable peers, we raised LS Cable & System's 2024E price-to-book ratio (PBR) from 2.0x to 2.7x."

Researcher Jang acknowledged that the recent sharp rise in stock price is a burden, but still sees potential for improvement in LS Holdings' corporate value due to the revaluation of LS Cable & System's equity value. He noted, "There remains momentum for concretizing plans to expand the submarine cable factory within the first half of the year, copper prices are maintaining strength and attempting to break previous highs, and strong second-quarter earnings are expected from LS Cable & System and LS MnM."

LS Cable & System's consolidated sales for the first quarter reached 5.95 trillion KRW, with operating profit at 243.7 billion KRW, exceeding the operating profit consensus of 208.5 billion KRW by 16.9%. Even excluding LS Electric, which already announced its first-quarter results, the figure surpassed market expectations by about 16 billion KRW. He analyzed, "LS Cable & System's performance is particularly encouraging, and the improvement in the industrial power cable sector beyond submarine cables is reflected in the numbers."

Meritz Securities forecasted LS Cable & System's second-quarter sales at 1.66 trillion KRW and operating profit at 95 billion KRW, expecting a record-high operating profit margin of 5.7%.