[Click eStock] LG Chem, Target Price Lowered to 780,000 Won

[Asia Economy Reporter Junho Hwang] Yuanta Securities lowered the target price of LG Chem to 780,000 KRW on the 30th. This target reflects the decline in the battery division's stake following the listing of LG Energy Solution and the downturn cycle in the petrochemical sector.

First, a decrease in LG Chem's earnings is expected. Yuanta Securities forecasts LG Chem to achieve sales of 49.6 trillion KRW and an operating profit of 3.6 trillion KRW (operating margin of 7.3%) this year. The operating profit estimate represents a 32% decrease compared to last year's 5.3 trillion KRW.

The earnings decline is anticipated to occur in the petrochemical division due to weak demand and new facility expansions. The spread per ton of major petrochemical products is expected to fall from 1,041 USD last year to 716 USD. This is below the 781 USD level seen during the previous cycle downturn in 2018.

The transfer of the battery business division, which had supported LG Chem's stock price, to LG Energy Solution through a physical division was also considered in the target price adjustment. Researcher Kyuwon Hwang of Yuanta Securities stated, "Considering the listing of LG Energy Solution next year and the entry into the petrochemical downturn cycle, we lowered the target price to 780,000 KRW (previously 970,000 KRW). When evaluated most conservatively (battery 23 trillion KRW, basic materials 11 trillion KRW), the bottom price level is around 550,000 KRW."

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