Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>Three key catalysts for LG Corp include potential inclusion in Korea Value Up Index, an IPO of LG CNS in 1Q 2025, and an increasing probability of higher shareholder returns. </li>
<li>An IPO of LG CNS is likely in 1Q 2025. LG CNS is currently valued at about 7 trillion won and LG Corp has a 50% stake. </li>
<li>Our base case NAV valuation analysis of LG Corp suggests implied NAV of 15.3 trillion won or NAV per share of 96,957 won, which is 19.8% higher than current price.</li>
</ul>


Three key catalysts for LG Corp include potential inclusion in Korea Value Up Index, an IPO of LG CNS in 1Q 2025, and an increasing probability of higher shareholder returns. 
An IPO of LG CNS is likely in 1Q 2025. LG CNS is currently valued at about 7 trillion won and LG Corp has a 50% stake. 
Our base case NAV valuation analysis of LG Corp suggests implied NAV of 15.3 trillion won or NAV per share of 96,957 won, which is 19.8% higher than current price.


LG Corp: Three Key Catalysts + NAV Valuation

Equity Bottom-Up

<ul>
<li>Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.</li>
<li>For holdco discount, we used a 50% holdco discount. If investors perceive improvement in value (such as through corporate governance improvements), the holdco discount on LG Corp would decline.</li>
<li>LG Corp's shares are up 5.9% in the past six months, outperforming all the major LG Group related companies including LG Chem, LG H&amp;H, LG Electronics, and LG Energy Solution. </li>
</ul>


Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.
For holdco discount, we used a 50% holdco discount. If investors perceive improvement in value (such as through corporate governance improvements), the holdco discount on LG Corp would decline.
LG Corp's shares are up 5.9% in the past six months, outperforming all the major LG Group related companies including LG Chem, LG H&amp;H, LG Electronics, and LG Energy Solution. 


LG Corp: Updated NAV Analysis Amid Ongoing Corporate Value Up Program in Korea

Cross Asset Strategy

<ul>
<li>There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. </li>
<li>In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.</li>
<li>There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).</li>
</ul>


There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. 
In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.
There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).


Korea Value Up Index - Surprising Inclusions and Exclusions

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.</li>
<li>Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.</li>
<li>Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.</li>
</ul>


A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.


Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

<ul>
<li>It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. </li>
<li>There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. </li>
<li>Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. </li>
</ul>


It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. 
There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. 
Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. 


Concerns About A Major Accounting Fraud at Kakao Mobility

South Korea

LG Corp. is a holding company, which operates subsidiaries including LG Electronics, LG Household & Health Care, LG Chem Ltd., and Dacom Corp. The Company's main business areas are electronics, chemicals, and household products manufacturing and telecommunications services.

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LG Corp (003550 KS)

LG Corp: Three Key Catalysts + NAV Valuation

Three key catalysts for LG Corp include potential inclusion in Korea Value Up Index, an IPO of LG CNS in 1Q 2025, and an increasing probability of...

Douglas Kim

LG Corp: Updated NAV Analysis Amid Ongoing Corporate Value Up Program in Korea

Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.

Douglas Kim

Korea Value Up Index - Surprising Inclusions and Exclusions

There are many surprising inclusions and exclusions in the Korea Value Up Index. We provide 30 companies that are surprising inclusions and 10...

Douglas Kim

Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

A high-ranking official confirmed that tax cut incentives for the value-up program will be unveiled by the end of this month. This post...

Sanghyun Park

Concerns About A Major Accounting Fraud at Kakao Mobility

FSS is investigating Kakao Mobility for a potential, major accounting fraud. There are suspicions that Kakao Mobility may have artificially...

Douglas Kim

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