[Click e-Stock] "LS: Performance Improvement and New Order Momentum"

On December 29, KB Securities analyzed that LS could undergo a mid- to long-term corporate value re-evaluation, as the improved performance of its subsidiary LS Cable, momentum from new orders, and shareholder-friendly responses to affiliate listing issues are converging.

Park Geonyoung, a researcher at KB Securities, stated, "We are maintaining our 'Buy' investment opinion on LS and our target price of 260,000 won," adding, "We used the P/B-ROE model to calculate the target price, and the target P/B ratio of 1.46 times was derived by setting the average sustainable ROE for 2025 to 2029 at 13.5%." As of December 24, the current share price is about 30.8% lower than the net asset value (NAV) of LS calculated by KB Securities.

The growth potential of LS Cable, a key unlisted subsidiary, is cited as the core factor for LS's value re-evaluation. Park explained, "Even in 2026, the improved performance and order momentum of the unlisted subsidiary LS Cable are expected to continue," adding, "Profitability is expected to improve as the sales proportion of high value-added products such as submarine cables increases." In particular, the possibility of large-scale additional orders due to the West Coast Energy Expressway project was highlighted as a positive factor.

The company's moves to expand into new businesses are also noteworthy. LS Cable recently announced that it is considering establishing a rare earth permanent magnet plant in the United States. Park stated, "According to media reports, the new plant is likely to be located near the submarine cable factory that LS Cable is currently building," and explained, "The company plans to recover copper from scrap cables to produce high-purity recycled copper, which will then be used to manufacture high-performance permanent magnets for electric vehicles and renewable energy." He assessed, "This is an effort to secure new growth drivers by expanding from the existing wire and cable-focused business into the advanced high-value materials sector."

Concerns in the market regarding affiliate listings were also addressed. Essex Solutions, a second-tier subsidiary of LS, has submitted a preliminary review application to the Korea Exchange for a listing on the KOSPI market. Park noted, "In the past, the listing of holding company affiliates has been criticized for undermining the value of ordinary shareholders and causing duplicate listings," but added, "If the protection of ordinary shareholders by the holding company is ensured, and if the affiliate grows after raising funds through the IPO thanks to favorable business conditions, and in the long term contributes to the holding company's cash flow and dividend resources, then the affiliate's listing will not necessarily result in a holding company discount."

LS's response to these issues was also evaluated positively. Park emphasized, "After holding a shareholder meeting, LS announced both the background and funding needs for the Essex Solutions listing, as well as shareholder return policies for ordinary shareholders," adding, "This is a factor that alleviates market concerns about the affiliate's listing."