[Click eStock] "From Dragon's Tail to Snake's Head"... LG Sangsa Establishes Itself as Main Company of New Holding Company

Restructuring Business Portfolio in Secondary Battery Materials, IT Platforms & Solutions, Healthcare
Expected Growth as LX Holdings' Key Subsidiary

[Asia Economy Reporter Minwoo Lee] As LG Corporation becomes a key subsidiary of LX Holdings, the new holding company of LG Group, it is expected to enter a phase of full-scale growth. The company is anticipated to restructure its business portfolio by expanding into various platform and solution businesses based on information and communication technology (ICT), starting from secondary battery materials.

On the 15th, Hi Investment & Securities raised LG Corporation's target stock price by about 15.2% to 38,000 KRW and maintained a 'Buy' rating. The previous trading day's closing price was 29,550 KRW.

Previously, on November 26 last year, LG resolved at its board meeting to spin off the investment divisions of four subsidiaries?LG Corporation (24.7%), Silicon Works (33.1%), LG Hausys (33.5%), and LG MMA (50.0%)?out of 13 subsidiaries to establish a new holding company, LX Holdings. After LX Holdings launches on May 1, it is expected to relist on the KOSPI on May 27. At a certain point, LG Group Chairman Koo Kwang-mo will exchange his LX Holdings shares, and LG Group Advisor Koo Bon-joon will swap his LG shares in a stock swap, completing the separation of the affiliates.

Since LX Holdings is a pure holding company, most of its corporate value derives from its subsidiaries. Lee Sang-heon, a researcher at Hi Investment & Securities, explained, "Because LG Corporation holds trading and logistics businesses, it will become the main subsidiary of LX Holdings. LX Holdings will increase its stake in LG Corporation using treasury shares and other means, while enhancing LG Corporation's corporate value through various new businesses and mergers and acquisitions (M&A), thereby also boosting LX Holdings' corporate value."

LG Corporation will hold its regular shareholders' meeting on the 24th and amend its articles of incorporation for the first time in 12 years since 2009 to add new business purposes in this context. New business purposes to be added include waste collection, transportation, and treatment facility installation and operation for promoting eco-friendly businesses; development and operation of e-commerce, digital content, and platforms driven by the spread of the digital economy; medical testing, analysis, and diagnostic services; tourism and lodging businesses. The researcher added, "LG Corporation will accelerate its business portfolio restructuring using funds secured from asset sales last year. Alongside the nickel business, a core material for secondary batteries, it will pursue entry into ICT-based platform and solution businesses and actively promote healthcare businesses."

The existing logistics business is also expected to perform well. Positive conditions have been created due to increased cargo volume and rising raw material prices. The researcher noted, "Since September last year, demand in the Americas has rebounded, increasing cargo volume. This year, as COVID-19 vaccination expands and the spread of COVID-19 subsides, cargo volume is expected to increase significantly. The logistics sector, including Pantos, is expected to benefit from the increased cargo volume, and the recent rise in raw material prices will also positively impact performance."

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