[Click eStock] NH "LG Begins Restructuring... Buy Before Trading Suspension"

[Asia Economy Reporter Ji Yeon-jin] NH Investment & Securities forecasted that LG Group's holding company LG's re-listing after a spin-off on the 27th of next month will enhance shareholder value through liquidity utilization and strengthen its new growth portfolio.

Dongyang Kim, a researcher at NH Investment & Securities, said, "The separation of LG-LX affiliates through a share exchange among major shareholders is expected to be completed within the year, and the structural reorganization to strengthen core businesses has already begun." He added, "We expect shareholder value enhancement through liquidity utilization and strengthening of the new growth portfolio, but the current stock price is discounted by 67% compared to the net asset value (NAV)."

LG is an integrated holding company formed in 2003 through the merger of LGCI, a chemical sector holding company, and LGEI, an electronics sector holding company. Last year, its sales reached 6.6321 trillion KRW, a 1.5% increase from the previous year. As a pure holding company, it holds major listed subsidiaries such as LG Electronics, LG Chem, and LG Uplus. It is expected to enhance shareholder value and strengthen its new growth portfolio through a solid financial structure, increased dividend income from subsidiaries, and cash inflow by partially liquidating stakes in unlisted subsidiaries. Trading will be suspended from the 29th of this month.

LG plans to separate its affiliates through a 91:9 spin-off. The surviving holding company LG will maintain its core businesses in electronics, chemicals, and telecommunications, resolving uncertainties arising from the affiliate separation. Structural reorganizations to strengthen core businesses, such as LG Chem's physical spin-off of LG Energy Solution, the establishment of an electric vehicle powertrain joint venture (JV) between LG Electronics and Magna, and the reorganization of the smartphone business, have already begun, according to analysis.

Through this affiliate structural reorganization, LG's operating profit is expected to grow by 59% to 2.7042 trillion KRW this year, driven by strong performance from major affiliates. With net cash alone reaching 1.6 trillion KRW, it is anticipated that shareholder value will be enhanced through liquidity utilization and new growth businesses such as ESG (Green Tech), bio and digital healthcare, and deep tech will be strengthened.

Sales and operating profit for the first quarter of this year are expected to be 1.7276 trillion KRW (+9% year-on-year) and 703.5 billion KRW (16%), respectively, in line with market expectations. LG Electronics announced preliminary results that significantly exceeded market consensus due to strong performance in home appliances and TV businesses, and LG Chem is estimated to have posted its best-ever first-quarter results due to strong petrochemical product spreads.

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