LG Energy Solution, First Day After Lock-Up Shows Slight Decline of Around 1%

Rebound Expected Upon Resolution of Supply and Demand Issues

[Asia Economy Reporter Myunghwan Lee] LG Energy Solution started lower on the first day after the lock-up period expired for shares accounting for 86% of its listed stock. The securities industry expects a rebound opportunity in the stock price following this supply and demand issue.

As of 1:20 PM on the 27th, LG Energy Solution was trading at 388,000 KRW, down 1.52% (6,000 KRW) from the previous trading day. The stock price, which had fallen more than 2% immediately after the market opened, briefly turned to a slight rise, indicating that the shock was not severe. From this day, the lock-up period expired for 201,463,650 shares of LG Energy Solution, which have been listed on the KOSPI for over six months.

The securities industry had anticipated that the expiration of LG Energy Solution’s lock-up would be a major event for the stock market this week, expecting a significant market impact. Although the 191.5 million shares held by the largest shareholder, LG Chem, are unlikely to be released into the market, 9,963,650 shares held by institutional investors will become tradable. This accounts for 4.26% of the total listed shares, which is considerable given that LG Energy Solution’s current free float ratio is about 10%. Since the recent stock price of LG Energy Solution is approximately 30% higher than the IPO price of 300,000 KRW, there is a high possibility that these investors will realize profits.

The regular MSCI (Morgan Stanley Capital International) index review is also linked to this lock-up expiration. An increase in the free float ratio due to the lock-up release could lead to a higher inclusion weight. Dongchan Yeom, a researcher at Korea Investment & Securities, said, "Although there are negative factors in terms of supply and demand, the possibility of expanding LG Energy Solution’s free float ratio in the August MSCI review is a positive factor," adding, "If stock price volatility increases due to supply and demand instability, it should be seen as an opportunity to increase weighting ahead of the August MSCI quarterly review."

On the other hand, some analysts believe that the inclusion weight in the August MSCI review will not be significant. Kyungbeom Ko, a researcher at Yuanta Securities, analyzed, "Expectations for an increase in inclusion weight in the August MSCI review should be lowered," and "Not all changes related to the free float ratio from the lock-up expiration will be reflected in the August review."

The general consensus in the securities industry is that once this supply and demand issue passes, earnings will recover from the third quarter onward. Chulhee Cho, a researcher at Korea Investment & Securities, forecasted, "(LG Energy Solution) is the most aggressively targeting the U.S. and European markets among the three domestic secondary battery companies," and added, "Once the short-term supply and demand issue passes, the stock price will rise in line with the industry recovery."

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