[Click eStock] "LG Shareholder Return Plan Also Considering Expansion of Subsidiary Stakes... Target Price Downgraded"

[Asia Economy Reporter Hwang Yoon-joo] Ebest Investment & Securities positively evaluated LG on the 30th for finally unveiling a shareholder value enhancement plan. However, the investment opinion was downgraded to 'Buy' with a target price lowered to 95,000 KRW.

Researcher Lee Seung-woong of Ebest Investment & Securities stated, "Although the NAV (Net Asset Value per share) discount rate has decreased recently due to changes in the value of subsidiary shares, we expect a further decline in the NAV discount rate driven by the company's own factor of strengthening shareholder returns."

On the 27th, LG's board of directors decided on a mid- to long-term shareholder value enhancement plan, including ▲dividends of more than 50% of separate net income ▲share repurchases totaling 500 billion KRW by 2024.

Researcher Lee analyzed, "Although the dividend payout ratio remains at 50% of separate net income as before, the removal of the phrase ‘dividend income limit’ increases the possibility of additional dividend hikes, and despite a decrease in subsidiary profits, dividends are expected to be maintained at a certain level."

LG also decided to repurchase treasury shares worth a total of 500 billion KRW by the end of 2024. Based on the previous trading day's closing price (74,700 KRW), this corresponds to about 6.27 million shares, or 4.0% of the outstanding shares.

Researcher Lee said, "Although detailed plans such as cancellation after repurchase have not yet been reviewed, it is positive that LG stated there will be no short-term sales or share exchanges," adding, "Since shareholder returns from investment gains generated by subsidiary share sales have been strengthened, additional share repurchases are also expected."

He continued, "LG also indicated that expanding subsidiary shareholdings is under consideration," and added, "The target price has been lowered reflecting changes in the value of subsidiary shares."

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