Corona Turns Crisis into Opportunity... LG Electronics Rising Again

LG Group Listed Companies Recover Market Capitalization of 100 Trillion Won

[Asia Economy Reporter Eunmo Koo] Despite the ongoing uncertainty in demand caused by the novel coronavirus disease (COVID-19), LG Electronics is recovering its stock price by leveraging the competitiveness of its home appliances.

According to the Korea Exchange on the 16th, LG Electronics' stock price closed at 74,900 KRW, up 5.79% (4,100 KRW) from the previous trading day. LG Electronics has closed higher for six consecutive trading days until the day before, rising 18.5% this month alone, outperforming the KOSPI return (4.4%) by more than four times during this period. With the rise in stock price the day before, the stock price, which had been below last year's closing price of 72,100 KRW since the end of last year, turned positive this year.

The recent rise in LG Electronics' stock price has been led by foreign investors. Foreign investors have net purchased LG Electronics shares worth 111.7 billion KRW this month until the day before, ranking second among the most purchased stocks by foreigners during this period, following Samsung Electronics. Institutional investors also supported the rise by net purchasing 67.8 billion KRW during the same period.

Despite concerns over COVID-19, the release of solid second-quarter earnings provided a foundation for the stock price's downside resilience and subsequent rise. On the 7th, LG Electronics announced through a disclosure that its second-quarter operating profit was provisionally estimated at 493.1 billion KRW. Although this is a 24.4% decrease compared to the same period last year, it is a strong performance exceeding market expectations (405.8 billion KRW).

Ko Eoyoung, a researcher at Hi Investment & Securities, explained, “TVs and home appliances performed well, and COVID-19 seems to have turned into an opportunity. Demand for large-sized premium lines, including organic light-emitting diode (OLED) products, is exceeding expectations as people spend more time at home, and home appliances are generating steady demand even amid COVID-19 by differentiating with steam functions specialized in sterilization.”

It is also evaluated that good performance is possible in the third quarter, supported by the effects of economic stimulus measures in various countries. No Kyungtak, a researcher at Eugene Investment & Securities, forecasted, “Although consumption temporarily slowed in the first half due to the global spread of COVID-19, consumption is rapidly recovering due to the effects of economic stimulus measures by governments worldwide, improving the business environment.” He added, “As consumption polarization intensifies, demand for premium products is expected to continue, which could be a factor for performance improvement for LG Electronics, which has a high proportion of premium products.”

As LG Electronics and others continue their stock price rise, LG Group stocks have also recovered a market capitalization of 100 trillion KRW. According to financial information provider FnGuide, the market capitalization of 13 listed LG Group companies, which was 84.437 trillion KRW at the end of last year, recorded 100.838 trillion KRW based on the closing price the day before, regaining the 100 trillion KRW mark. The market cap of LG Chem, the flagship stock, led the expansion, increasing 71.3% from 22.413 trillion KRW at the end of last year to 38.402 trillion KRW, and LG Electronics also rose from 11.799 trillion KRW to 12.257 trillion KRW during the same period.

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