[Click eStock] "LG Chem, Operating Profit Expected to Decrease This Year... Target Price Down"

On the 17th, Kiwoom Securities forecasted that LG Chem's operating profit this year will decrease by 37% compared to last year due to the weak petrochemical industry conditions. Accordingly, they downgraded the investment opinion to 'Hold (Marketperform)' and lowered the target stock price to 350,000 KRW.

Shin Daehyun, a researcher at Kiwoom Securities, stated, "We expect the petrochemical industry conditions in the 2nd and 3rd quarters of this year to slightly improve compared to the 1st quarter, but weaken again in the 4th quarter."

LG Chem's profitability is significantly influenced by the performance of LG Energy Solution, which holds the largest share on a consolidated basis. LG Energy Solution projected mid-single-digit sales growth this year. However, since the preliminary results announced on the 9th, market consensus suggests the possibility of underperformance.

Researcher Shin explained, "(LG Energy Solution) is expected to be significantly affected by adjusted average selling prices (ASP) despite volume increases, due to continued weakness in raw materials such as lithium metal and a slowdown in downstream demand. The petrochemical sector may see slight market improvements compared to 2023, but it is expected to weaken again in the 4th quarter."

LG Chem is conducting approximately 4 trillion KRW in annual CAPEX investments amid stagnant profitability. At this point, it can be seen as a period of investment aimed at harvesting future gains rather than reaping profitability immediately.

Researcher Shin analyzed, "We slightly lowered the target stock price by adjusting the premium (EV/EBITDA 6x) in line with changes in earnings estimates and secondary battery growth rates. Although this is a necessary period for the company's growth, from an investor's perspective, it may be seen as a period of reduced investment attractiveness."