Samsung Securities said on the 30th that, for LG Chem, the damage to fundamentals outweighs expectations for boosting shareholder value. It lowered the target price to 390,000 won from 420,000 won. It also changed its investment rating to "Hold" from "Buy."
LG Chem said the previous day that it posted revenue of 11.1971 trillion won and an operating loss of 413.3 billion won in the fourth quarter of last year (October to December). Revenue fell 8.8% from a year earlier, and the operating loss continued. In particular, operating profit fell well short of the consensus (the average of securities firm estimates) of a 198.4 billion won surplus.
Oh Dong-hwan of Samsung Securities said, "The key was that the basic materials and advanced materials segments were weaker than expected," adding, "The advanced materials segment, which makes cathode materials, will remain in the red through the third quarter of this year, and basic materials is also expected to see a further deterioration in market conditions due to the introduction of new in-region crackers (petrochemical facilities)."
He also noted there are no additional plans to enhance corporate value beyond what was previously laid out. The plan to sell equity in LG Energy Solution, which the market had high hopes for, was limited in this earnings release to presenting a plan to liquidate 9.4% over the next five years, remaining at the same level as the corporate value enhancement plan in December last year.
Oh said, "This is a time when the damage to fundamentals is greater than the expectations for momentum to improve shareholder value," adding, "If additional shareholder value enhancement plans are announced going forward or M&A via the sale of equity in subsidiaries becomes visible, an upgrade of the investment rating would be possible."