LG Chem Ltd. has become the third most valuable Korean stock amid high expectations for its leadership in production of secondary batteries in high demand in the age of automation and smart applications.

Shares of LG Chem ended 0.26 percent lower at 390,000 won ($345.7) on Tuesday on primary Korea Composite Stock Price Index (Kospi). Although shares finished slightly lower on Tuesday from the previous day, LG Chem shares have surged more than 6 percent this month alone to near 400,000 won.

LG Chem’s shares jumped 13 percent this year as of Monday – the third-largest increase among top market-cap stocks after SK Hynix Inc. (23.5 percent) and Samsung Electronics Co. (19.4 percent). LG Chem was followed by Samsung C&T Corp. (10.4 percent), Posco (8 percent), and Hyundai Motor Co. (1.7 percent).

LG Chem’s ascended to No. 3 in market cap, moving up from eighth as of end of December. The company’s market value has increased 3 trillion won in less than two months.

The steep rise in LG Chem shares comes on rosy prospects on secondary battery business. The company’s investment in secondary battery sector increased from about 1 trillion won in 2017 to 1.9 trillion won last year. This year, the company vows to invest more than 3 trillion won.

KTB Investment & Securities Co. in a recent report said that order balance from electric vehicle battery business jumped from 42 trillion won in the end of 2017 to 85 trillion won in the end of last year. LG Chem plans to expand battery production capacity from 70 gigawatt hours (GWh) this year to 100 GWh by 2020 to cope with rapid growth in demand.

The growing expectations on industry improvement and boost in spending in China are also factors positively affecting LG Chem shares. The chemical industry is projected to improve starting in the second quarter ending June, traditionally a strong season. The Chinese government’s stimulus package to boost its economy will also lead to a rise in demand for chemical products, experts noted.

By Chung Hee-young and Lee Eun-joo

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