[Click eStock] "LS, Unlisted Subsidiary Value to Be Concentrated Due to Dual Listing Regulations... Target Price Raised"

On May 20, SK Securities raised its target price for LS from 2.8 million won to 6.3 million won, citing the continuation of favorable market conditions and ongoing improvements in the performance of its subsidiaries. The investment opinion was maintained as 'Buy'.

Choi Gwansoon, an analyst at SK Securities, explained, "With high equity stakes in major subsidiaries including LS Cable (92.6%), LS I&D (95.1%), and LS MnM (75.1%), LS is expected to show strong share price elasticity in response to its subsidiaries' improving performance. Currently, LS is trading at a 41.9% discount to its net asset value (NAV), and considering the pace of subsidiary performance improvement and the high proportion of unlisted subsidiaries in NAV, valuation attractiveness remains high."

Due to regulations on dual listings, the value of unlisted subsidiaries is expected to be concentrated within the holding company. Choi noted, "LS attempted to list Essex Solutions earlier this year but withdrew the plan. Recently, as the government has strengthened regulations on dual listings, the probability of listing LS Cable and LS MnM has also declined, which increases the likelihood that the value growth of unlisted subsidiaries will be reflected in the share price of the holding company."

For the first quarter of this year, LS posted 9.5 trillion won in sales, up 37.5% year-on-year, and 476.1 billion won in operating profit, a 56.4% increase. Operating profits from major affiliates—cable (16.8%), electric (45.0%), MnM (154.2%), and I&D (30.9%)—all increased, driving improvement in consolidated results. Choi stated, "In the cable division, profitability was enhanced by increased orders and an improved product mix, and MnM's profitability also improved due to higher copper premiums and by-product prices. With investments expanding in areas such as artificial intelligence (AI) data centers, semiconductors, power grids, and renewable energy, performance improvement is underway across all group subsidiaries, and the favorable business environment is expected to continue in the second half of the year."

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