LG Electronics plans to invest 494.1 billion won in LG Display
Na Shinpyeong “LG Electronics, cash flow is decreasing and borrowings are increasing”
LG Electronics and LGD credit rating has limited impact
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Nice Credit Rating (Na Credit Rating) diagnosed that the financial support burden of LG Electronics (AA/Stable) participating in LG Display’s paid-in capital increase is increasing.
LG Display (A/Stable) decided on a paid-in capital increase worth 1.3579 trillion won on the 18th. LG Electronics, the largest shareholder, plans to invest 494.1 billion won of the total investment. After the capital increase, LG Electronics’ shareholding ratio is expected to drop slightly from 37.90% to 37.47%.
In a report on the 19th, Na Shinpyeong said, “LG Electronics provided 1 trillion won in monetary loans in the first half of this year, and has recognized equity method losses in recent years. Cash flow will decrease and borrowings will increase due to participation in paid-in capital increase.” explained. In addition, he said, “We plan to continuously review the impact of direct and indirect burdens on LG Electronics’ financial stability.”
However, considering that assets are expanded to match the capital requirement, the actual decline in financial stability will not be significant and the impact on credit rating will be limited.
Meanwhile, the credit rating impact of the large-scale paid-in capital increase on LG Display was assessed to be limited.
It is expected that the overall financial stability will be improved through paid-in capital increase, with the debt ratio falling from 322.2% to 279.5% and net borrowing dependence falling from 35.9% to 31.1%. However, financial costs and equipment due to sluggish demand for panels in the display industry are expected to increase. This is because the creation of EBITDA, which falls below capital requirements such as investment (CAPEX), can continue.
Invest Chosun Paid Service Posted at 17:09 on December 19, 2023
2023-12-19 08:09:00
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