April 19, 2024

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[THE INVESTOR] LG’s stock price will be weighed down by slow subsidiaries but will rebound soon, said HI Investment and Securities on Sept. 14, lowering the target price to 100,000 won (US$89.29) from 115,000 won while maintaining a “buy” recommendation. 

Its stock price has been sliding in tandem with those of LG Electronics and LG Chem. The battery sector, however, will advance sharply in the coming two to three years and boost the LG Chem. LG Electronics is serving as a control tower for electric vehicle parts business forming a value chain across subsidiaries. The electronics heavyweight is supplying 11 key parts to GM’s next-generation Chevrolet Volt, while the chemical affiliate is providing batteries. It has also struck a strategic partnership with Volkswagen, said analyst Lee Sang-heon. 

The outlook for the EV market is rosy, and most of LG Chem’s over 60 trillion won order backlog amount is related to second-generation EVs. As its subsidiaries’ stocks are bottoming out, LG’s stock will rebound accordingly, and trading at 0.7 times its price-to-book ratio, its valuation is attractive, said the analyst. 

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