April 20, 2024

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[THE INVESTOR] LG’s stock price decline is excessive compared to the changes in value of its public subsidiaries, said KB Investment and Securities on Aug. 31, upgrading the recommendation to a “buy” from a “hold” while maintaining 97,000 won (US$87.21) target price. 

Reports of major subsidiaries LG Electronics and LG Chem’s slow second-quarter earnings have dragged down its stock price to 0.73 times its price-to-book ratio. However, LG Chem stocks are showing signs of recovery and LG Electronics will follow suit as its subsidiary LG Display will boost its earnings in the latter half. As a result, the holding company’s stocks will regain, said analyst Kim Jun-seop. 

The earnings improvement of private subsidiary Serve One also should be noted as its second-quarter operating profit hiked 26.5 percent on-year to 70 billion won on the back of revenue increase from overseas construction business. Meanwhile LG will not be affected by the possible revision of Fair Trade Act as its stake in subsidiaries is higher than the required rate, the analyst said.

By Hwang You-mee (glamazon@heraldcorp.com)