By Kwanwoo Jun
LG Corp.'s shares rallied Monday on hopes for better investor returns after it decided to buy back shares and removed a ceiling on future dividend payments.
Shares in the South Korean holding company, which has big stakes in multiple LG Group affiliates, rose 9.9% to 81,900 won ($65.28) in early afternoon trade, notching a four-month intraday high. The Kospi benchmark was 1.2% higher.
LG Corp.'s rally came after it decided Friday after markets closed that it would repurchase KRW500 billion in stocks, or about 4% of its total market capitalization, by 2024 to help boost investor returns.
The company also removed a stipulation stating that its dividend payouts shouldn't exceed its own dividend income.
The removal of the dividend rule paves the way for LG Corp. to use other income resources and pay better dividends to investors, SK Securities analyst K.S. Choi said in a research note Monday.
Mr. Choi said he expects LG Corp.'s dividend per share to rise to KRW3,600 in 2022, up 29% from KRW2,800 in 2021.
Regulatory filings show that LG Corp. retains share holdings of 33.67% in LG Electronics Inc., 33.37% in LG Chem Ltd. and 37.66% in LG Uplus Corp.
The holding company's earnings largely come from dividend income via its holdings in LG units, trademark rights and real-estate properties, the filings show.
Ebest Investment & Securities analyst S.W. Lee said in a research note Monday that he remains positive on LG Corp.'s estimated KRW1.9 trillion in cash reserves, particularly on its plan to invest about KRW1 trillion of that in new businesses.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
May 30, 2022 01:39 ET (05:39 GMT)
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