LG Chem, 'Record High Performance' Yet Stock Price Falls... Institutional Investors Hold Back

[Asia Economy Reporter Koh Hyung-kwang] Although LG Chem announced record-breaking earnings for the third quarter, its stock price rather slipped. The stock price was dragged down by institutional investors who sold more than 35 billion KRW worth of shares in a single day.

According to the Korea Exchange on the 13th, LG Chem closed at 672,000 KRW on the KOSPI market the previous day, down 2.8% from the previous trading day. Despite the good news of the largest quarterly earnings, the stock price fell by nearly 3%.

Looking at LG Chem’s preliminary third-quarter earnings announced the day before, operating profit increased by 158.7% year-on-year to 902.1 billion KRW, and sales rose 8.8% over the same period to 7.5073 trillion KRW. The third-quarter earnings not only significantly exceeded the securities firms’ consensus estimates but also marked the largest quarterly earnings LG Chem has ever posted.

This is the first time LG Chem has announced preliminary quarterly earnings. The finalized third-quarter earnings will be announced on the 21st. In the securities industry, there is an interpretation that LG Chem advanced the announcement of record-high earnings to appease individual investors ahead of the planned spinoff of its battery business. However, despite the strong performance, the falling stock price was seen as insufficient to soothe shareholder dissatisfaction.

The decline in LG Chem’s stock price the previous day was driven more by institutional investors than individuals. On that day, individuals and foreigners net bought LG Chem shares worth 28.7 billion KRW and 6.8 billion KRW, respectively. However, institutions net sold shares worth 35.5 billion KRW, nearly matching the combined buying amount of individuals and foreigners, fueling the stock price decline. A financial investment industry official said, "Unlike individuals who bought shares on LG Chem’s record earnings, institutions appear to have taken advantage of the good results to realize profits."

Last month, LG Chem decided to spin off its battery division. After an extraordinary general meeting on the 30th and completion of the spinoff through a physical division, LG Chem will own 100% of LG Energy Solution (tentative name), the newly established battery business corporation launching on December 1. LG Chem’s strategy is to raise funds through the listing of LG Energy Solution thereafter.

LG Chem shareholders are concerned that the company’s value will decline if the high-growth battery division is separated. There was even a petition on the Blue House’s public petition board asking to prevent damage to individual investors caused by the spinoff of LG Chem’s battery business. Shareholders expressed, "If it were a spin-off by incorporation, shareholders who have supported LG Chem so far would also hold shares in the battery corporation, but since it is a physical division, it inevitably feels like a betrayal."

Meanwhile, as of 11:10 AM on the same day, LG Chem’s stock price was trading at 653,000 KRW, down 2.8% from the previous trading day.

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