LS Corp: Chairman's Words Have Big Impact on Share Price

• On 6 March, LS Group Chairman Koo Ja-Eun publicly stated "If you think duplicate listings are a problem, then just don’t buy the stocks after the listing.”

• Chairman Koo's comment was not in the best interest of the major LS Group companies including LS Electric and LS Corp that are publicly traded.

• LS Group is preparing to list at least five unlisted affiliates including LS E-Link, Essex Solutions, LS Cable, LS MnM, and KOC Electric in the next 1-3 years.

LS Group is the 13th largest conglomerate in Korea. LS Corp (006260 KS) is the holding company of the LS Group. On 6 March, LS Group Chairman Koo Ja-Eun publicly stated that “Small companies have no choice but to continue to inject funds in order to grow, and they need to secure funds to invest, but the methods are limited. If you think duplicate listings are a problem, then just don’t buy the stocks after the listing.”

The chairman's comment was in response to concerns about duplicate listings rising in the market. His comment pushed down lower many of the top LS Group stocks including LS Corp (down 10.3%) and LS Electric (010120 KS) (down 12.1%). Chairman Koo's comment was not in the best interest of the major LS Group companies including LS Electric and LS Corp that are publicly traded. Investors could always put their precious capital in thousands of other stocks.

Conclusion First

LS Group Chairman Koo's comment "If you think duplicate listings are a problem, then just don’t buy the stocks after the listing” is slap on the face for the shareholders of major LG Group affiliates including LS Corp and LS Electric. He should probably apologize since it has already caused a lot of damage on the share prices of major LS Group companies.

Going forward, this is likely to further negatively impact the LS Corp which is the quasi-holding company for the LS Group. LS Group is preparing to list at least five unlisted affiliates including LS E-Link, Essex Solutions, LS Cable, LS MnM, and KOC Electric in the next 1-3 years. As these companies become publicly listed, many investors would rather invest in the operating companies, rather than the quasi-holding company LS Corp.

LS Corp is trading at P/E of 8.2x and P/B of 0.5x, based on consensus earnings estimates. LS Corp continues to have high leverage ratios. Its debt ratio is expected to be 175% at the end of 2024. ROE is mediocre and the company's ROE is estimated to be 8% in 2025.

All in all, we believe that LS Corp's shares could continue to get dragged lower in 2025 as many investors have greater concerns about "duplicate shares" of LS Group companies as more LS Corp owned companies start to get listed.