By Kim Yoo-chul
LG Chem had a good year last year.
If its stock price can be taken as a bellwether for this year’s outlook, it could be even better in 2011.
Analysts and financial market watchers sum it up as a bull run.
Shares of LG Chem rose over 30 percent in the previous two months, according to the Korea Exchange (KRX).
Foreign investors are particularly excited, raising their exposure toward 35 percent.
LG generates over 50 percent of its revenue from petrochemical-related businesses, while strengthening its new areas of batteries, LCD glass and polysilicon.
LG Chem currently supplies rechargeable batteries for electric vehicles to 10 global carmakers including General Motors, Ford, Renault and Hyundai-Kia.
Deutsche Securities and Bank of America Merrill Lynch have revised up their targets for LG Chem.
``LG’s LCD glass business will add to our corporate value. Our target price is 580,000 won per share,’’ BoA Merrill Lynch said in a research note to clients. The company’s shares closed up 29,000 won at 549,000.
Daiwa Securities revised up its operating profit forecast for LG to 3.4 trillion won this year to 572,000 won.
``We expect LG Chem to see profits from batteries and petrochemicals this year,’’ Daiwa said.
LG Chem’s market cap rose to 30 trillion won as of the end of March from 3 trillion won in late 2006, KRX said.
U.S.-based credit-rating agency Moody’s rated LG Chem at A3, while Standard & Poor’s gave it A-.
Such positive predictions come after LG Chem reported record quarterly operating profit for the first three months of 2011.
In a regulatory filing to the KRX, LG Chem said its operating profit during the first quarter was 803 billion won, while net profit was 656 billion won, both record highs.
Quarterly sales were 5.4 trillion won. LG said the results were mostly due to market stabilization in petrochemicals.
Impressed by this its chief executive Kim Bahn-suk told analysts and investors that LG is mulling the possibility of building a polysilicon factory in the southern industrial city of Yeosu, where it has its petrochemical plant.
Polysilicon is the critical material in solar-cells.
Kim, who is also one of the top confidants of LG Group Chairman Koo Bon-moo with LG Electronics CEO Koo Bon-joon and Kwon Young-soo of LG Display, had been silent about LG’s plan to jump into the polysilicon business.
``I wondered for more than two and a half years ago whether LG could yield profit from the polysilicon business. After approval from our board in June, LG will start to construct the plant,’’ said Kim during an investor relations (IR) session in Seoul.
``We see our polysilicon technologies and solar-cell markets as quite positive. With better cost cuts, LG will lead the way.’’