LG Affiliates Draw Mixed Ratings; LG H&H Emerges as Winner

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'artificial intelligence (AI)-based customized news recommendation and summarization service' developed with support from the Korea Press Foundation. It selects and provides six customized news articles by reader type.

1. "Value Over Earnings"…LG Electronics Outlook Lowered, LG H&H Target Prices Raised Across the Board

- Key Summary: Second-quarter earnings at LG Group affiliates generally beat market estimates, but the direction of target price adjustments varied by stock. According to financial data provider FnGuide, among LG Group reports published over the past week, there were 14 target price upgrades and 23 downgrades. LG Electronics saw its target price lowered as a decline in the average KOSPI price-to-book ratio (PBR) was reflected, despite the growth potential of its AI data center cooling and robotics businesses. In contrast, LG H&H was cited as the only affiliate to have both its investment opinion and target price raised simultaneously by securities firms, as its North American sales surpassed China for the first time and its cosmetics business turned to profit.

2. 15 Months After Securing Land…Samsung Electro-Mechanics to Launch Philippines MLCC Plant Early

- Key Summary: Samsung Electro-Mechanics plans to bring its third MLCC (multilayer ceramic capacitor) plant under construction in Calamba, Philippines, into operation from the end of the first quarter of next year, earlier than initially expected. This comes 15 months after securing the site, which is seen as the result of an order-linked, ultra-fast expansion strategy in full swing, based on long-term supply agreements (LTAs) signed with global Big Tech firms. The new plant will be used as a dedicated production facility for high-capacity AI MLCCs to be mounted on Nvidia's next-generation accelerators Vera Rubin and Feynman, while the utilization rate at Samsung Electro-Mechanics' existing plants has already risen to the high 90% range. Samsung Electro-Mechanics plans to double its capital expenditure (CAPEX) from 3 trillion won this year to 6 trillion won next year, moving to secure leadership in the AI component cycle.

3. Won Appreciates 8.8% in a Month…Largest Gain Since Financial Crisis

- Key Summary: The won-dollar exchange rate fell to 1,424.0 won at the end of last month, down 125.4 won from the end of June, posting an appreciation rate of 8.81%, the strongest gain since March 2009. Analysts said the won's strength was accelerated as currency conversion of proceeds from SK hynix's ADR issuance and dollar selling by exporters were joined by U.S. and Japan's first joint yen-buying intervention in 28 years. The won strengthened not only against the dollar but also against the yen and yuan, recording the largest appreciation among major currencies during the month of July. While the market discusses the possibility of the won-dollar rate falling below 1,400 won in the second half, observers note that a fourth-quarter rebound is also possible if expectations of U.S. rate hikes strengthen again.

4. 'Market's Worst Day'…Savvy Investors Loaded Up on Samsung Electronics

- Key Summary: Savvy investors in the top 5% of returns over the past three months were found to have bought Samsung Electronics the most during the plunge when circuit breakers were triggered for two consecutive days on the 28th and 29th of last month. As Samsung Electronics fell 13.3% and 5.2% respectively during this period, demand for bargain-buying or averaging down is interpreted to have concentrated. In addition, purchases of semiconductor-related products such as KODEX SK hynix Single Stock Leverage and KODEX Leverage stood out, while inverse products such as KODEX 200 Futures Inverse 2X were included in large numbers among the top net-sell stocks, showing profit-taking moves amid the falling market.

5. [Exclusive] Single-Stock Leverage Aftershock…New ETF Product Launches Also Blocked

- Key Summary: Due to a backlog in the Korea Exchange's exchange-traded fund (ETF) listing review, the likelihood has grown that August's new product launch schedule will be pushed back one after another. Following the launch of single-stock leverage ETFs, related work has piled up, increasing the burden on the exchange's ETF listing staff of only five, according to reports. There are concerns that if the review delay becomes prolonged, the launch timing of thematic ETFs where investor interest is concentrated, such as artificial intelligence (AI), semiconductors, and defense, could be delayed, putting them at a disadvantage in the competition to preempt demand. The exchange's position is that it has not suspended review work, but it has notified asset managers in advance of the possibility of review delays for newly submitted products.

6. IBK Industrial Bank of Korea, Hopes for Exchange Rate Stability and Expanded Dividends in Second Half…Upside Potential Over 30%

- Key Summary: The securities industry expects the re-rating of IBK Industrial Bank of Korea's corporate value to continue, based on high net interest margin (NIM) and expanded dividends. According to financial data provider FnGuide, the consensus target price for IBK is 27,333 won, indicating upside potential of more than 30% compared to the closing price of 20,650 won on the 31st of last month. As the decline in first-half net profit stemmed from foreign currency translation losses and increased loan loss provisions due to the high exchange rate, analysts say earnings are likely to improve if the exchange rate stabilizes in the second half. IBK conducted its first-ever quarterly dividend last month, and is reportedly also reviewing a plan to expand quarterly dividends to twice a year starting next year.