[Click eStock] "LG Chem, Target Market Cap 100 Trillion Won... 2Q Also Expected to Achieve Record High Performance"

[Asia Economy Reporter Song Hwajeong] Hana Financial Investment on the 29th reflected a significant improvement in LG Chem's earnings and set the target market capitalization at 100 trillion KRW. The target stock price was raised from the previous 1.2 million KRW to 1.4 million KRW, while maintaining a 'Buy' investment rating.

Yoon Jaesung, a researcher at Hana Financial Investment, said, "Reflecting the substantial earnings improvement in petrochemicals and batteries, we have raised the company's operating profit estimates for this year and next year by 15-31%," adding, "We present the target market capitalization at 100 trillion KRW by deducting net debt of 4.8 trillion KRW from the petrochemical enterprise value (EV) of 29 trillion KRW and battery EV of 75 trillion KRW." Due to the petrochemical supercycle, net debt, which approached 9 trillion KRW at the beginning of last year, is expected to fall below 5 trillion KRW by the end of this year.

LG Chem achieved record-high earnings in the first quarter of this year. On a consolidated basis, first-quarter sales increased by 43.4% year-on-year to 9.65 trillion KRW, and operating profit surged 584% to 1.4081 trillion KRW. Researcher Yoon analyzed, "The first-quarter operating profit exceeded the consensus (1 trillion KRW) by 40%," adding, "Both petrochemicals and batteries delivered surprises due to the elimination of provisions made in the previous quarter, sales expansion, and cost reductions." The first-quarter petrochemical operating profit reached a record high of 980 billion KRW, and battery operating profit also recorded a record high of 340 billion KRW.

It is expected to break the record for the highest earnings again in the second quarter. Researcher Yoon explained, "Second-quarter operating profit is expected to increase by 8% from the previous quarter to 1.52 trillion KRW, setting a new record again," adding, "This is because petrochemical operating profit will further improve to 1.17 trillion KRW." This is due to the elimination of a one-time cost of about 50 billion KRW related to the Yeosu naphtha cracker (NCC) issue in the previous quarter, the volume increase effect from the Yeosu NCC expansion, and additional margin improvements in other products such as bisphenol A (BPA) and NB latex (NBL). However, battery operating profit is expected to decrease by 12% from the previous quarter to 300 billion KRW due to production issues at automakers and rising logistics and raw material costs.

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