Chemical giant approaches record high in Korea stock exchange
LG Chem managed to bounce back in the South Korean stock market after struggling a while due to the controversial decision to split off its electric vehicle (EV) battery unit.
Late last month, shareholders approved the idea aimed at racking up fast growth of its EV battery unit.
LG Chem is scheduled to start its new affiliate, dubbed LG Energy Solution, on Dec. 1 this year. It is expected to go public in a few years to secure sufficient funds necessary to compete with global powerhouses in the EV battery business.
But not all investors loved the plan.
First of all, the National Pension Service publicly expressed its opposition. It is LG Chem’s No. 2 shareholder with a stake of 10.4 percent.
After the shareholders gave a green light, the stock price of LG Chem plummeted more than 6 percent a day.
As a result, the country’s largest chemical company saw its share price plummet around 15 percent after it announced the split midway through this September.
But the outfit’s share price rebounded to approach its record high achieved this August.
Watchers point out that investors should focus on the firm’s long-term potential rather than short-term uncertainties.
“We are required to check its long-term prospects,” Kiwoom Securities analyst Jang Min-jun said.
Shinyoung Securities analyst Park Se-ra concurred.
“We need to keep an eye on its specific business strategy and dividend policies,” Park said.