LS Group Chairman Koo Ja-eun, second from left, inspects the sales space of LS Electrical on the sidelines of InterBattery 2025 in Seoul, Wednesday. Yonhap
Shares of LS Group and its key associates continued to say no on Friday after Chairman Koo Ja-eun unsettled buyers with what gave the impression to be a hasty comment relating to the group’s a number of itemizing plans.
LS Group is making ready to checklist 5 associates, together with LS E-Hyperlink and Koc Electrical, as a part of its efforts to lift capital for enterprise enlargement.
“We solely have a number of restricted choices to lift funds for small companies’ sustainable progress,” Koo instructed reporters Wednesday throughout InterBattery 2025.
“The itemizing of subsidiaries was not a problem in any respect prior to now. If this can be a drawback, you wouldn’t have to purchase the shares after they’re listed.”
Nonetheless, his remarks have drawn robust backlash from buyers as a result of adverse public notion of a number of itemizing plans by conglomerates. Again in 2021, LG Chem stood on the heart of an issue, after its shares plummeted as a result of its resolution to separate off a battery unit and function two separate listed entities.
Trade officers and buyers acknowledged the intent behind his remarks however famous that he ought to have been extra cautious along with his wording, as the top of the group.
“It seems too hasty for Koo to have made such remarks in public, as such an perspective naturally causes outrage from buyers,” an official from a conglomerate stated.
In response to information from the Korea Alternate, shares of LS Group proceed to plummet. Its shares fell by 10.29 p.c on Thursday and went on to lower greater than 5 p.c on Friday morning.
Different key associates had been additionally hit arduous by Koo’s controversial comment. Shares of LS Electrical closed with a steep fall of 12.11 p.c on Thursday.
Beginning this yr, the corporate’s shares have surged onto a powerful progress trajectory, reaching a excessive of over 300,000 gained ($207) per share final month, pushed by a powerful earnings outlook. LS Electrical shares ended up dropping progress momentum within the wake of the most recent controversy. The corporate is traded at lower than 220,000 gained per share as of Friday morning.
LS Eco Vitality additionally closed with a drop of 5.39 p.c on Thursday, with a bunch of smaller associates extending a dropping streak of their inventory worth throughout the identical interval. As of Thursday, the mixed market capitalization of LS Group’s 9 associates dropped by 4.36 p.c from a day earlier. This quantities to a fall of 650 billion gained, the most important single-day decline for Korea’s conglomerates.
Specialists suggested Koo to problem a public apology for the rash comment.
“Main U.S. companies are converging their associates to spice up the inventory worth of their mom agency, however Korean conglomerates go within the fully other way,” stated Kim Dae-jong, a professor of enterprise administration at Sejong College.
Korean companies focus excessively on maximizing their earnings by itemizing as many associates as doable, however this does no good for growing the worth of their company fundamentals, in response to the professor.
“The pinnacle of LS Group must problem apologies for making the comment and inflicting harm to buyers,” he added.
