[THE INVESTOR] LG’s governance structure improvement may face uncertainties, said NH Investment and Securities on July 16, lowering the target price to 87,000 won (US$77) from 103,000 won.

Its second-quarter earnings will satisfy market expectations, with 2.98 trillion won in revenue and 550.2 billion won in operating profit, said analyst Kim Dong-yang. 

Koo Kwang-mo has taken over the helm of the company and is expected to strengthen smart car business and to expand into areas related to the “fourth industrial revolution,” including robots and artificial intelligence, said the analyst. 

There are uncertainties, however, as Group Vice Chairman Koo Bon-joon, who owns 7.7 percent stake in the conglomerate, is planning to resign at the end of the year, and possibly some affiliates will disaffiliate, noted Kim. 

Meanwhile, LG will have to acquire additional 5 percent stake in LG International to meet reinforced requisites for holding companies should the bill pass in the latter half, but 44 billion won is not a significant burden, he said but maintained a “hold” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)