[Click eStock] "LG, Still Room to Rise After Listing Change Following Split"

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[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained its 'Buy' rating and target price of 164,000 KRW for LG, which will be re-listed after a spin-off, expecting that price volatility following the resumption of trading will not be significant.

The surviving holding company LG will be re-listed on the 27th after approximately one month of trading suspension due to a 91 to 9 spin-off. The simultaneous quotation will begin at 126,500 KRW, the price just before the trading suspension and the all-time high. Dongyang Kim, a researcher at NH Investment & Securities, said, "The KOSPI volatility during the trading suspension period was minimal at -0.4%, and the valuation fluctuation due to the spin-off was only 2.7%, so price volatility following the resumption of trading is expected to be limited."

The reason for the valuation fluctuation is that 'Investments in affiliates and joint ventures' were split based on book value, whereas listed subsidiaries are evaluated at market value when calculating net asset value (NAV). The market-to-book multiples of the surviving holding company's listed subsidiaries are relatively high.

There is still potential for stock price appreciation. Researcher Kim said, "Although net cash decreased by 10.3% to 1.5 trillion KRW after the spin-off, stable cash flow based on a dividend income ratio of 92.4%, which aligns with the spin-off ratio, and a slightly higher brand royalty ratio of 96.2% compared to the spin-off ratio, will support the maintenance of the dividend policy. Structural reforms to strengthen core businesses such as chemicals and electronics have already begun, and the ESG (Environmental, Social, and Governance), bio and digital healthcare, and deep tech new growth portfolios are also expected to be reinforced."

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