LS SECURITIES noted that LG CHEM sold its aesthetic business instead of equity in LG Energy Solution, predicting on the 11th that it would take time for the value of the equity in LG Energy Solution to be reflected in the stock price of LG CHEM.
LS SECURITIES lowered the target stock price for LG CHEM from 308,000 won to 280,000 won. Due to the limited upward potential compared to the current stock price (276,500 won), the investment opinion was also revised from buy to 'hold.'
Jung Kyung-hee, a researcher at LS SECURITIES, pointed out that LG CHEM raised funds by selling its aesthetic business instead of utilizing equity in LG Energy Solution.
Jung interpreted that the change in capital markets law since last year, which requires major shareholders to disclose their equity sales one month in advance, is a consideration. He said, 'If LG CHEM wants to sell its subsidiary LG Energy Solution's equity, it must pre-disclose one month in advance, and due to concerns about 'overhang,' the stock price of LG Energy Solution may decline, implying potential worries about reduced sales proceeds.'
Earlier, LS SECURITIES expected that LG CHEM would sell its equity in LG Energy Solution. This is because it wanted to improve shareholder returns and considering this year's planned capital expenditures (CAPEX) of about 2.8 trillion won.
Jung assessed that if LG CHEM is concerned about the stock price decline due to pre-disclosure, the sale of equity in LG Energy Solution will inevitably be delayed.
Jung stated, 'It seems that LG CHEM is preparing for the sale of its equity in LG Energy Solution and the improvement of shareholder returns with a long-term perspective,' and added, 'He judged that the timing to recognize the subsidiary's equity value is still early and returned to the existing price-to-book ratio (PBR).'