Palliser Capital Urges LG Chem to Unlock $48B Value; Shares Surge

UPDATE: Activist fund Palliser Capital has just revealed that LG Chem Ltd. is trading at a staggering 74% discount to its net asset value, prompting a significant surge in the company’s share price to levels not seen in over a year. This urgent announcement was made today, October 3, 2023, at the 2025 Active-Passive Investor Summit in New York.

Palliser’s analysis indicates that LG Chem is undervalued compared to its peers in South Korea. The London-based fund estimates that the gap between LG Chem’s market value and its intrinsic value amounts to a shocking 69 trillion won (approximately $48 billion). As a result of this assessment, LG Chem’s shares soared by as much as 14.3%, peaking at 395,500 won before closing up 13.01% at 391,000 won.

In its presentation, Palliser Capital called for immediate reforms, urging LG Chem’s majority shareholder, LG Energy Solution Ltd., to implement a new board of directors and initiate a share buyback using its stake in the battery maker. “We see a seismic opportunity for LG Chem to adopt bold initiatives that embody the ‘LG Way’ philosophy,” stated James Smith, Palliser’s founder and chief investment officer.

The recommendation comes amid LG Chem’s struggle, as it recently reported a loss of 68.5 billion won (about $48 million) in the first half of 2023, a stark contrast to the operating profit of 193.6 billion won recorded during the same period last year. This financial setback has heightened the urgency for transformative strategies.

Palliser also proposed four key steps to enhance LG Chem’s value, including overhauling its management and implementing a share buyback-in-kind strategy. This innovative approach would allow LG Chem to repurchase its shares using LG Energy shares instead of cash, thus preserving liquidity while returning value to shareholders.

Moreover, Palliser urged LG Chem to adopt a long-term discount management program, aligning with South Korea’s broader corporate reform initiatives, including the ambitious Kospi 5,000 vision spearheaded by South Korean President Lee Myung Bak. This vision aims to elevate the Kospi index to unprecedented heights, targeting a level of 5,000 points.

As one of the top ten shareholders of LG Chem, with a stake exceeding 1%, Palliser’s influence is significant. Its bold recommendations have resonated in the market, leading to a palpable shift in investor sentiment. LG Chem, buoyed by the positive response, is anticipated to explore these proposals actively.

The stakes are high—not only for LG Chem but also for the broader South Korean economy, as the company plays a crucial role in the global EV battery supply chain. LG Energy Solution, with a market capitalization of 27.57 trillion won, stands as the third-most valuable company on the Kospi, right behind giants Samsung Electronics and SK Hynix.

As developments unfold, market analysts and investors will be closely monitoring LG Chem’s next moves. The urgency for action is clear, and Palliser’s call for reform may mark a pivotal moment for LG Chem as it seeks to unlock its substantial hidden value.

Stay tuned for more updates on this evolving story.