Stock prices of South Korean holding companies are tracking the performance of their non-listed subsidiaries that have plans to join the stock market as the move allows them to improve finances and gain the drive for new projects from the initial public offering (IPO) proceeds.

According to a business report by LG Corp., the holding company of LG Group, LG CNS Co. posted 235.8 billion won ($181.4 million) in net profit in 2022, up 10 percent from a year ago.

“LG CNS saw rapid growth in its new businesses including cloud services and smart logistics and revenue grew across both its affiliated and non-affiliated companies,” said Lee Seung-woong, an analyst at eBest Investment Securities Co. “The company’s sales are projected to go up by 14.8 percent this year and operating profit by 14 percent.”

LG CNS is estimated to be worth 4~5 trillion won.

Doosan Robotics Inc., a robot developer under Doosan Group and a non-listed affiliate of Doosan Corp., managed to narrow net losses to 7.4 billion won in 2022 from 14.4 billion won in 2021.

“The value of Rainbow Robotics in the industry reaches 1.8 trillion won,” said Kim Soo-hyun, an analyst at DS Investment & Securities Co. “The 1 trillion won offering price for Doosan Robotics is a considerably conservative estimate, given that the company has three times higher the sales revenue than Rainbow Robotics and boasts global market share and overseas references.”

LS MnM, formerly LS-Nikko Copper Inc. and a non-listed company under LS Group, also saw net profit rise to 278 billion won in 2022 from 204.8 billion won in 2021. Although LS MnM has no plans to join the stock market, the strong performance has lifted up the shares of the holding company.



Hyundai Oil Bank Co., owned 74 percent by HD Hyundai Co., also enjoyed a sharp increase of 153 percent in its net profit last year from a year ago. The solid performance is attributed to bigger margins from oil refinery driven by the global oil price hikes last year and a boost in exports of refined petroleum products.

Hyundai Oil Bank withdrew its plan to go public in July.

Kakao Mobility, which is preparing an IPO, posted a net loss of 68.7 billion won last year, swinging back to the red after a profit in 2021 despite steady growth in sales.

Kakao Entertainment Corp. also posted a net loss of 438 billion won in 2022, swinging back to a loss from a net profit of 244.4 billion won in 2021.

The mobility and entertainment companies are owned 57.5 percent and 73.6 percent, respectively, by Kakao. Kakao Mobility is valued at 8 trillion won and Kakao Entertainment 11 trillion won.

The listings of the two companies are expected to allow their parent Kakao to secure massive funds.

“The recent acquisition of SM Entertainment will allow Kakao Entertainment to speed up the IPO process,” said Yoon Ye-ji, an analyst at Hana Securities Co. “SM Entertainment is projected to raise 160 billion won in operating profit this year on sales of 983.6 billion won, driving up Kakao Entertainment’s performance upon reflection.”

Kakao Mobility may postpone its plan to go public given the unfavorable market conditions and its losses. The company kicked off the procedures to go public in 2021 but they have been pushed back due to changes in the stock market environment and opposition from the labor union.

By Kang In-seon and Chang Iou-chung

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]