Market Cap of Conglomerates
It has been found that the total market cap of the LG Group, which has 11 listed subsidiaries, fell 5.53% from 103.38 trillion won (US$93.0 billion) to 97.65 trillion won (US$87.9 billion) between the end of last year and March 6 this year. The group showed the highest rate of decrease among the 10 largest conglomerates in South Korea. It was followed by Hyundai Motor Group (5.28%, 11 subsidiaries), Samsung Group (4.44%, 16), Hanwha Group (3.85%, seven), and GS Group (1.55%, six).
The Hyundai Heavy Industries Group, meanwhile, increased its total market cap by no less than 32.56% during the period, from 16.3066 trillion won to 21.6172 trillion won. Lotte Group, Shinsegae Group and POSCO Group increased theirs by 11.02%, 10.71% and 5.8%, respectively.
In the LG Group, LG Electronics was the only subsidiary that showed an increase in market cap. For example, LG Household & Health Care’s aggregate market value decreased 10% from 18.57 trillion won to 16.7115 trillion won and those of LG U+, LG Innotek and LG Display fell 9.64%, 7.98% and 4.51%, too.
In fact, the LG Group increased its aggregate market value by as much as 46.84% last year to surpass all of the others. However, things have drastically changed since early last month. According to experts, this is because LG Group subsidiaries’ stock prices rose too much last year and their business outlook is not that positive.
For instance, LG Display’s operating profit for the first quarter of this year is estimated at 106.6 billion won although the company’s operating profit for the first quarter of last year amounted to 1.0269 trillion won. Likewise, the 11 listed subsidiaries of the LG Group are estimated to reach 2.8551 trillion won in operating profit in Q1, 2018, down 28.1% from a year earlier. LG Chem’s stock price soared by 145.17% last year, but more and more stock market experts are becoming pessimistic about the profitability of LG Chem’s electric vehicle battery business.
In the meantime, LG Innotek’s operating profit is estimated to reach 76.1 billion won in Q1, 2018, up 13.9% from a year ago. Those of LG Household & Health Care and LG U+ are expected to increase 5.6% and 4.9%, respectively.