[Click eStock] "LG, Expected to Benefit from Value-Up in Undervalued Range"

The view of the LG building in Yeouido, Yeongdeungpo-gu, Seoul [Image source=Yonhap News]

Hyundai Motor Securities evaluated LG on the 5th as a large-cap stock with potential for corporate value enhancement. Accordingly, they maintained a 'Buy' investment rating and a target price of 100,000 KRW.

Kim Han-yi, a researcher at Hyundai Motor Securities, stated, "Although the discount rate compared to net asset value (NAV) is at a historical low, it is still possible to approach it as 'undervalued,' so it can be purchased without burden."

Researcher Kim analyzed that this is an environment where the stock's inherent strength during market correction phases and recent investment attractiveness stand out. He noted, "They announced plans to disclose a corporate value enhancement plan in the fourth quarter and there is a possibility of canceling 3.9% of treasury shares acquired."

He further explained, "With the decision to additionally acquire LG Chem and LG Electronics shares worth a combined 500 billion KRW, mid- to long-term ROE is expected to rise, and the additional investment execution of 259.1 billion KRW in the first half is also positive."

LG plans to disclose the corporate value enhancement plan, including the use of treasury shares, after discussion at the board of directors in the fourth quarter. They are also currently disclosing plans to expand their stake by additionally acquiring LG Electronics shares worth 200 billion KRW and LG Chem shares worth 300 billion KRW on the market. The transaction is expected to be completed by March 31, 2025.

Researcher Kim analyzed, "Based on the closing price the day before the disclosure, the expected acquisition quantity is 2 million shares for Electronics and 1 million shares for Chemicals, which could increase LG Corp's common stock ownership ratio from 33.7% to 34.9% in Electronics and from 33.3% to 34.7% in Chemicals, representing increases of 1.2 percentage points and 1.4 percentage points, respectively."