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MarketScreener Homepage  >  Equities  >  Korea Stock Exchange  >  LG Chem, Ltd.    A051910   KR7051910008

LG CHEM, LTD.

(A051910)
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Tesla supplier LG Chem approves plan to split off battery business

10/29/2020 | 08:36pm EST

SEOUL, Oct 30 (Reuters) - LG Chem shareholders on Friday approved a plan to separate its battery business into a new company, paving the way for a potential public listing to finance expansion.

The unit, which will be launched on Dec. 1, will first become a wholly-owned subsidiary tentatively named LG Energy Solutions, and then up to 30% of the company's shares may be listed in an initial offering in about a year.

LG Chem is the world's top battery maker supplying Tesla Inc and General Motors Co.

"While the battery business is expected to post enormous growth, competition is intensifying from not only other battery makers but automakers," LG Chem Chief Executive Officer Hak Cheol Shin told a shareholder meeting in Seoul.

"We have decided to separate our battery business to better optimise our management in today's fast-changing market environment."

More than 82% of LG Chem shareholders who attended the meeting voted in favour of the plan, the source said. LG Chem declined to comment.

"With the split-off of the battery business, we can use various fundraising options to expand investments at the right time, and based on this we can secure a clear global No.1 position by widening the gap with rivals," LG Chem Chief Financial Official Cha Dong-seok said.

The company's growth was constrained by rising debts as a result of a sharp increase in capacity investments, he added.

Shares of LG Chem closed down 6.1% versus a 2.6% fall in the benchmark KOSPI.

Asked about selling stakes to strategic investors in the run-up to the IPO, Shin told Reuters the company was reviewing various options.

Hwang Yu-sik, an analyst at NH Investment & Securities, said that as a standalone company the battery business would be able to better raise money including through an IPO to expand its production capacity.

South Korea’s National Pension Service (NPS), LG Chem's No.2 shareholder with a 9.96% stake, voted against the split-off plan having earlier raised concerns about damage to shareholder value. (Reporting by Heekyong Yang and Hyunjoo Jin; additional reporting by Joyce Lee; Editing by Stephen Coates)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
KOSPI COMPOSITE INDEX -0.68% 2599.34 Real-time Quote.18.41%
LG CHEM, LTD. 6.82% 799000 End-of-day quote.151.65%
TESLA, INC. 6.43% 555.38 Delayed Quote.563.81%
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Financials
Sales 2020 30 218 B 27,3 B 27,3 B
Net income 2020 1 517 B 1,37 B 1,37 B
Net Debt 2020 8 016 B 7,23 B 7,23 B
P/E ratio 2020 38,8x
Yield 2020 0,85%
Capitalization 58 010 B 52 205 M 52 325 M
EV / Sales 2020 1 920x
EV / Sales 2021 1 525x
Nbr of Employees -
Free-Float 58,0%
Chart LG CHEM, LTD.
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LG Chem, Ltd. Technical Analysis Chart | MarketScreener
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Technical analysis trends LG CHEM, LTD.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 30
Average target price 900 586,21 KRW
Last Close Price 799 000,00 KRW
Spread / Highest target 50,2%
Spread / Average Target 12,7%
Spread / Lowest Target -43,7%
EPS Revisions
Managers
NameTitle
Hak Cheol Shin Vice Chairman & Chief Executive Officer
Okdong Son President
Jin-Soo Park Vice Chairman
Dong-Seok Cha Chief Financial Officer & Director
Ki-Soo No CTO & President-Executive Board
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