LG Chem hits new 52-week low after lowered target

[Courtesy of LG Chem]

Shares of South Korea’s LG Chem Ltd. lost ground Tuesday after the stock market raised concerns about the company’s financial burden.

Shares of LG Chem was trading 1.38 percent lower at 502,000 won ($374.41) on Tuesday morning.

The stock fell to 501,000 won intraday, hitting a new 52-week low.

Earlier in the day, Yuanta Securities Co. cut its target price for LG Chem to 800,000 won from 900,000 won, saying that the company will continue to face financial burdens related to external financing, despite its solid third-quarter performance.

“Although the company is expected to turn a profit in the basic materials segment due to the decline in naphtha prices in the third quarter, its cash generation from operating activities is expected to be only 2.3 trillion, which falls short of the 4 trillion won in capital expenditures and 800 billion in dividends,” said Hwang Gyu-won, an analyst at Yuanta Securities. “Therefore, the company will need to secure 2 trillion to 3 trillion won in external financing, and this financial burden is expected to continue into next year.”