[Click eStock] "LG Electronics Forecasts Record High Performance This Year... Attempts Quarterly Profit Turnaround Next Year"

[Asia Economy Reporter Oh Ju-yeon] On the 9th, KB Securities forecasted that LG Electronics' sales this year will reach 66.7 trillion KRW, and operating profit will be 2.8 trillion KRW, representing increases of 7.1% and 16.2% respectively compared to the previous year, achieving record-high performance. They also estimated that a quarterly turnaround to profit could be attempted next year, analyzing that the current stock price level is favorable for entry.

Researcher Kim Dong-won stated, "If the MC (smartphone) division only approaches the break-even point (BEP), LG Electronics' annual operating profit is expected to reach 4 trillion KRW," adding, "In particular, the MC division, which has recorded losses for more than five years, is also likely to undergo business adjustments in the second half of this year. Currently, the MC division is judged to be passing through its worst moment."

Researcher Kim explained, "According to overseas IT media, since 2020, LG Electronics is expected to change its strategic direction by moving away from the previous biannual smartphone release method of the G series in the first half and the V series in the second half, toward a multi-model release focused on mid-to-low-priced phones." Accordingly, it is judged that the LG Electronics MC division has created an opportunity to escape from five consecutive years of losses through cost structure improvements due to strategic changes starting from the second quarter, and a reduction in losses due to cost structure improvements is expected from the second half of this year.

The MC division's losses are expected to shrink from 332 billion KRW in the fourth quarter of 2019 to an average quarterly loss of 186.5 billion KRW in the second half of 2020, and a quarterly turnaround to profit is anticipated next year.

Additionally, from March, the H&A (home appliances) division is showing strong sales of hygiene appliances (Styler, PuriCare, Tromm) and laptops (Gram) in the Korean home appliance market due to the impact of COVID-19 and online education, raising expectations for record-high performance this year. The MC division, having passed its worst moment, is expected to reduce losses from the second half of the year.

Therefore, from an investment perspective over the next 6 to 12 months, it was emphasized that LG Electronics' current stock price level is favorable for entry.