LG Sangsa, Stock Price Doubles from Low Point Due to Treasury Stock Effect

[Asia Economy Reporter Song Hwajeong] LG Corporation is seeing significant benefits from its share buyback amid the market rebound.

According to the Korea Exchange on the 11th, LG Corporation's stock price has risen 45.04% so far this month through the previous day. Compared to the 52-week low recorded intraday on the 20th of last month, it has surged by 101.82%.

LG Corporation's large-scale share buyback has driven the recent stock price increase. On the 3rd, LG Corporation announced a large-scale share repurchase plan. The acquisition amount is 100 billion KRW, which corresponds to a 28.4% stake based on the closing price on the 3rd. The buyback started on the 6th and is scheduled to continue until December 15. On the 6th, the day the buyback began, LG Corporation's stock price hit the upper limit, and on the following day, the 7th, it rose more than 12%.

The share buyback plan also led to an upward revision of the target price. Baek Jaeseung, a researcher at Samsung Securities, commented on LG Corporation's share buyback: "The one-time cash inflow from the sale of LG Corporation's stake in Beijing Tower is not insignificant, and it was expected to be used to enhance shareholder value through dividend increases, among other means. However, the choice to repurchase shares instead of paying dividends, and the scale exceeding market expectations, is judged to be a factor that could cause short-term changes in corporate value." Samsung Securities raised LG Corporation's target price by 17%, from 12,000 KRW to 14,000 KRW, reflecting the value of the share buyback. Previously, Samsung Securities had lowered LG Corporation's target price by 22% due to downward revisions in this year's earnings per share (EPS) forecasts amid the impact of COVID-19. Samsung Securities raised the target price just five days after lowering it, following the share buyback announcement.

However, concerns remain about performance deterioration starting from the second quarter due to the full impact of COVID-19. Ryu Jehyeon, a researcher at Mirae Asset Daewoo, analyzed, "From the second quarter, when the impact of COVID-19 becomes full-scale, further deterioration in performance is expected. The logistics sector is likely to experience weakness in most areas, including exports, installation logistics, logistics center operations, and transportation (W&D)."

This content was produced with the assistance of AI translation services.