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Photos=Yonhap News |
[Alpha Biz= Kim Jisun] IBK Investment & Securities lowered its target price for LG Chem from 460,000 KRW to 370,000 KRW on Monday, citing concerns that the company would report a significant operating loss for the fourth quarter of last year.
In a report released on the same day, IBK Investment & Securities estimated that LG Chem incurred an operating loss of 238.9 billion KRW in Q4, significantly lower than the consensus estimate of a 60.5 billion KRW operating profit.
The firm analyzed that all of LG Chem's business divisions, including petrochemicals, advanced materials, and batteries, likely faced poor performance. It was expected that the petrochemical division would have posted a 13.8 billion KRW loss due to the off-season and excess supply from China.
The advanced materials division, which makes materials for secondary batteries, is projected to have seen a 57.6% drop in operating profit, ending at 63.7 billion KRW. The report noted that the price drop in battery materials, coupled with a decline in metal prices, added negative lag effects.
For LG Energy Solution, the battery division, the company is expected to have posted a substantial operating loss of 225 billion KRW. This was due to a reduction in tax credit benefits caused by inventory adjustments from its major customer, General Motors (GM), along with falling battery prices.
IBK Investment & Securities highlighted that LG Chem’s stock has fallen excessively, leaving it undervalued. However, the firm maintained a “Buy” rating on the stock.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
