Daeshin Securities Initiates Coverage on LG Corp with Buy Rating, Citing Lowest PBR Among Holdings and Valuation Re-rating Potential

Daeshin Securities Initiates Coverage on LG Corp: "Lowest PBR in Coverage Universe — Strong Value-Up Upside Expected"

Daeshin Securities initiated coverage of LG Corp (KRX: 003550) on the 15th with an investment rating of Buy and a target price of 110,000 won.

Valuation Methodology

Daeshin Securities derived its target price using a Sum-of-the-Parts (SOTP) valuation. The discount rate applied was 40%, representing the lowest level recorded in the period from the date Korea's Commercial Act revision was formally announced to the date the first amendment passed.

Lowest PBR in Coverage Universe

LG Corp's current price-to-book ratio (PBR) stands at 0.5x, the lowest among the holding companies covered by Daeshin Securities. The brokerage argues that should further pressure arise from amendments to the Capital Markets Act — part of Korea's broader "value-up" programme aimed at closing the so-called "Korea discount" — LG Corp stands to be among the most significant beneficiaries of corporate value enhancement measures.

Balance Sheet Strength and Shareholder Returns

LG Corp is the only holding company in Daeshin's coverage universe with a standalone net cash position of approximately 1.3 trillion won. The brokerage concludes that this financial soundness, combined with ample capacity for shareholder returns, justifies an additional compression of the discount rate relative to peers.

For 2026, consolidated revenue is estimated at 8.11 trillion won and operating profit at 1.312 trillion won, underpinned by a recovery in profitability at core subsidiaries and the holding company's inherent cash-generation capacity from trademark royalties and rental income.

Shareholder Return Policy

On the shareholder returns front, LG Corp has maintained an annual ordinary dividend per share (DPS) of 3,100 won for 2025 (including an interim dividend of 1,000 won), satisfying the requirements for preferential separate taxation on dividend income under Korean tax law. The post-tax proceeds from the recent sale of Gwanghwamun Building for approximately 400 billion won have also been secured, providing additional resources for shareholder returns and future investment.

Regarding treasury share cancellation, LG Corp pre-emptively declared the full cancellation of its treasury shares ahead of any statutory obligation arising from Commercial Act reform. With cancellation scheduled for completion within the first half of 2026, the move is seen as setting a benchmark for internal policy under which future share buybacks would be conducted on the premise of subsequent cancellation.

Net Asset Value Breakdown

LG Corp's net asset value (NAV) is estimated at approximately 2.6684 trillion won. The largest component is its stake in LG Chem at 28.9%, followed by LG Electronics at 24.2%, HS Ad at 9.7%, and LG Household & Health Care at 9.6%. A standalone net cash position of approximately 1.3480 trillion won contributes a positive factor of 5.1% within the NAV calculation.

Corporate Value Enhancement Targets

Under its corporate value enhancement plan, LG Corp has set a return on equity (ROE) target of 8–10% by 2027. A minimum dividend payout ratio of 60% has been formally codified. The deployment of proceeds from the Gwanghwamun Building sale is to be communicated to the market following a board decision.