[Click eStock] "LG, a Stock That Captures Both Battery and Untact Appeal"

[Asia Economy Reporter Minji Lee] Mirae Asset Daewoo on the 2nd issued a buy rating and a target price of 100,000 KRW for LG. This is based on the judgment that the revaluation of the operating value of its subsidiaries LG Chem and LGCNS after the COVID-19 pandemic could drive the company's stock price increase.

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LG Chem is expected to improve its performance centered on batteries as the growth rate of the electric vehicle market accelerates. Although a global economic slowdown due to COVID-19 is anticipated, demand for electric vehicles is expected to remain strong. LG Chem has secured customers such as Volkswagen, Audi, Porsche, Jaguar, and Renault, and expanded its electric vehicle battery market share to 27.1% in the first quarter of this year.

Researcher Jeong Daero of Mirae Asset Daewoo said, “As Tesla expands its market dominance through price cuts, global automakers are planning to launch numerous new models with significantly improved competitiveness compared to existing electric vehicle models,” adding, “The electric vehicle market is expected to rapidly expand from mid-year onward.”

LG CNS is demonstrating sales growth through the expansion of IT new technology businesses such as cloud computing despite the impact of COVID-19. In particular, it is promoting a project to convert more than 90% of the IT systems of LG affiliates such as LG Electronics, LG Chem, and LG Display to cloud-based systems by 2023. Externally, it is working on converting Korean Air’s enterprise IT systems to the cloud.

Researcher Jeong said, “In the future, external business performance in the untact market will become full-fledged,” and “By completing the sale of shares to Macquarie PE, LG CNS will strengthen its overseas business and enhance corporate value by utilizing Macquarie’s overseas network and investment assets.”

Active shareholder return policies are also expected. As of the first quarter, the company’s cash and cash equivalents amount to 1.7 trillion KRW. This is because it received 300 billion KRW from the sale of 60.1% of its shares in Sub One in April, dividends from S&I Corporation, and about 1 trillion KRW from the sale of 35% of LG CNS shares to Macquarie PE.

Researcher Jeong said, “Based on cash and cash equivalents, the company can actively implement shareholder return policies such as increased dividends and share buybacks, as well as use the funds for expanding its own business to improve operating cash flow,” adding, “If specific utilization plans for the undervalued company’s cash assets are confirmed one by one, a revaluation could occur.”

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