[Click eStock] "LG, Continued Value-Up... Expecting Improvement in Cash Flow and NAV"

On the 15th, NH Investment & Securities maintained a target price of 120,000 KRW and a 'Buy' investment rating for LG Group, expecting an enhancement in mid- to long-term cash flow and net asset value (NAV).

Researcher Kim Dong-yang evaluated, "LG is enhancing shareholder value through direct and indirect investments in domestic and international new businesses centered on artificial intelligence (AI), bio, and cleantech, as well as shareholder returns, based on net cash of 1.5 trillion KRW and annual holding company cash flow of around 1 trillion KRW."

He added, "They are currently expanding stakes in subsidiaries LG Electronics and LG Chem with a total value of 500 billion KRW," and "an initial public offering (IPO) of subsidiary LG CNS is expected in the first half of next year."

Researcher Kim stated, "Under the dividend policy of 'returning more than 50% of separate net profit excluding one-off items,' LG has continuously raised dividends per share over the past six years," and "a value-up plan is expected to be announced within the year, which is also anticipated to include the cancellation of treasury shares worth 500 billion KRW that were previously acquired." With the participation of affiliates in the value-up program, LG's cash flow and NAV are also expected to strengthen.

Meanwhile, LG's third-quarter performance met market consensus. Third-quarter sales increased by 4% year-on-year to 1.9442 trillion KRW, while operating profit decreased by 7% to 476.7 billion KRW.

Researcher Kim diagnosed, "LG CNS, which filed for preliminary listing review last month, showed significant external growth due to affiliate ERP construction projects and increased cloud service orders, and LG Management Development Institute also continued external growth due to increased AI researcher service orders," but "D&0 turned to a deficit, and despite increased leisure sales, external scale contracted due to continued reduction in construction investment by client companies."

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