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 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

LG Corp, the holding company of the LG Group, has three key near-term catalysts.

• First, LG Corp is likely to be included in the Korea Value UpIndex which is expected to be launched in late September. This index is expected to include at least 100 companies in KOSPI and KOSDAQ.

  • When the Value-Up index is launched, there will be more Value Up ETFs that track this index and many domestic pension funds and foreign institutional investors are likely to increase their capital allocation to the Value Up related ETFs. For further details, see our insight Launch of Korea Value Up Index in September.

  • We believe there is a high probability of LG Corp being including in the Korea Value Up Index. LG Corp is the 31st largest stock in KOSPI by market cap. It is also the largest pure-play holding company in Korea.

• Second, an IPO of LG CNS is likely in 1Q 2025. LG CNS is the information technology giant of LG Group. LG CNS is getting ready to complete its IPO in Korea in early 2025. LG CNS has already selected the main bankers on this deal including KB Securities Co., Bank of America (BoA) and Morgan Stanley. Macquarie PE (second largest shareholder of LG CNS) is expected to partially exit from its investment in LG CNS made in 2019.

  • Macquarie PE purchased a 35% stake in LG CNS from LG Corp for 950 billion won in 2019. LG Corp is the largest shareholder of LG CNS with a 49.95% stake.

  • Local media accounts have mentioned that LG CNS' value could be about 7 trillion won (US$5.1 billion). LG CNS's valuation has more than doubled in the past five years.

  • Previously, LG CNS tried to complete its IPO in 2022 but backed out due to uncertain market conditions. For further details, see our insight Initial Thoughts on the LG CNS IPO.

Source: Company data

Source: Company data