[Click eStock] "LG, Stock Severely Undervalued... Time to Buy"

[Asia Economy Reporter Park Jihwan] On the 20th, SK Securities maintained a 'Buy' investment opinion and a target price of 130,000 KRW for LG, stating that the current stock price level is excessively undervalued compared to the value of its subsidiaries.

Choi Gwansoon, a researcher at SK Securities, said, "On the 14th, LX Group Chairman Koo Bon-jun disclosed that he sold 4.2% of LG shares he held through a block deal and donated 1.5% to three LG public interest foundations: LG Yeonam Cultural Foundation, LG Sangnok Foundation, and LG Welfare Foundation," adding, "With the proceeds from the block deal, he purchased 32.3% of LX Holdings shares held by LG Chairman Koo Kwang-mo and others." As a result, Koo Bon-jun secured 40.0% of LX Holdings shares and only 2.0% of LG shares remain. On the other hand, Koo Kwang-mo's LX Holdings shares became zero. Researcher Choi said, "Although Koo Kwang-mo had the possibility to additionally acquire LG shares with the sale proceeds, it is likely to be used as a source for inheritance tax."

LG's current market capitalization is trading at a 65% discount compared to its Net Asset Value (NAV). It is a market cap lower than the value of LG Chemical shares held by LG. The undervaluation compared to LG's NAV is analyzed to be due to the high proportion of listed subsidiaries in the NAV, which lowers the investment merit of the holding company.

Among LG subsidiaries, LG CNS, which is likely to be listed, showed continuous growth in corporate value with sales and operating profit increasing by 28.2% and 57.4% respectively in the third quarter compared to the same period last year, raising market interest. Although LG CNS's book value is only 194.4 billion KRW, its corporate value is traded at around 7 trillion KRW in the over-the-counter market.

Researcher Choi emphasized, "The current market capitalization is significantly undervalued compared to the value of subsidiaries, so the risk of stock price decline is limited," and added, "With the improvement in LG CNS's performance, the investment merit of the holding company is expected to increase."

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