 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, South Korea – October 22, 2025 – NH Investment & Securities has attributed LG Chem Ltd.’s recent stock surge to rising valuation of its subsidiary holdings, particularly LG Energy Solution, and growing expectations that the company could unlock shareholder value through more active capital management.
Analyst Choi Young-kwang noted that the uptrend in LG Chem’s share price reflects renewed optimism over the secondary battery sector, particularly in energy storage systems (ESS). However, he added that the 13% spike on October 22 was largely triggered by comments from UK-based activist fund Palliser Capital, which described LG Chem as “deeply undervalued” and urged the company to take value-enhancing actions.
According to Palliser’s proposal, the fund recommended:
Improving board independence by appointing external directors capable of challenging management and protecting shareholder rights;
Aligning executive compensation with shareholder returns;
Implementing a return-focused capital allocation framework;
Using its LG Energy Solution stake to repurchase shares; and
Establishing a long-term discount management program to close the valuation gap.
Choi emphasized that while ESS demand is emerging as a potential growth driver amid slowing EV sales, LG Chem’s cathode materials (NCM: nickel, cobalt, manganese) differ from the LFP (lithium iron phosphate) chemistry dominant in ESS applications — meaning the company will not directly benefit.
However, he pointed out that the rising share price of LG Energy Solution, which is more directly positioned to benefit from ESS battery demand, could provide indirect gains to LG Chem through its subsidiary equity holdings.
“The activist proposal could reduce the holding discount applied to LG Chem’s stake in LG Energy Solution by highlighting opportunities for more efficient capital use,” Choi said.
“In the medium to long term, similar shareholder-led initiatives may continue to pressure LG Chem to improve capital efficiency, restructure assets, and enhance shareholder returns.”
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
