LG Energy Solution opens at 597,000 won in debut
LG Energy Solution opened at 597,000 won ($500) on its first day of trade, up from the 300,000 won initial public offering price.
The electric vehicle battery maker failed to reach the upper limit for debut trading — 780,000 won — and fell immediately after the opening to 450,000 won.
Thirty minutes in, it settled at around 490,000 won.
According to exchange rules, new issues can double and then rise by an additional 30 percent on their first day of trading.
The volatility came as markets globally have been trading downward in the face of rising interest rates and doubts about speculative businesses and stocks.
LG Energy Solution’s market cap for a time broke 110 trillion won, which made it the second largest company in Korea by that measure after Samsung Electronics.
The company was a battery division of LG Chem before it was carved out as a separate business in December 2020. Some LG Chem shareholders strongly objected to the maneuver, saying it would reduce their exposure to the battery business.
LG Chem is left with three divisions: petrochemicals, life sciences and advanced materials.
On Wednesday, Yuanta Securities said the appropriate price for LG Energy Solution is between 390,000 won and 510,000 won for a market cap ranging between 63 trillion won and 120 trillion won.
“If the stock price reaches 510,000 won and the market cap surpasses 120 trillion won, it will become a more valuable stock than CATL,” said Hwang Kyu-won, an analyst at Eugene Securities.
CATL is the world’s largest EV battery maker, with 29 percent market share compared to LG Energy Solution’s 22 percent.
LG Energy Solution said it will use the raised funds to expand global manufacturing capacity to take on China’s CATL. It plans to invest 5.6 trillion won in the United States, 1.4 trillion won in Europe and 1.2 trillion won in China through 2024.
Hwang estimates LG Energy Solution's 2022 net profit at 929.6 billion won on 23.3 trillion of won of revenue.
The company had planned to go public last year but delayed the process due to a huge recall of Chevy Bolts, which were equipped with LG Energy Solution batteries and were at risk of catching fire.
BY JIN MIN-JI [email@example.com