[Click eStock] "LG Electronics Expected to Exceed Q2 Earnings Consensus"

Hana Financial Investment Issues 'Buy' Rating and Target Price of 83,000 Won... Closing Price on 4th at 62,200 Won

[Asia Economy Reporter Geum Boryeong] There is a forecast that LG Electronics' second-quarter earnings will exceed consensus expectations.

According to Hana Financial Investment on the 5th, LG Electronics' second-quarter earnings this year are expected to be KRW 13.3993 trillion in sales and KRW 505.3 billion in operating profit. These figures represent a decrease of 14% and 24%, respectively, compared to the previous year.

Hana Financial Investment's previous operating profit forecast was KRW 406.6 billion, and the consensus was KRW 384.2 billion. Kim Rokho, a researcher at Hana Financial Investment, explained, "The reason for raising the operating profit forecast is that the domestic market, which accounts for 30% of home appliance sales, has recovered from the impact of COVID-19, and demand centered on steam appliances is favorable. There were concerns about a decline in global TV demand and the resulting poor performance of the HE business division, but the decline in TV demand is estimated to be smaller than expected. It is believed that the increase in time spent at home due to COVID-19 has driven TV demand." He added, "The MC (smartphone) division is expected to show a visible reduction in losses compared to the previous quarter. The main reason is that sales increased by 14% quarter-on-quarter, easing the burden of fixed costs."

Despite COVID-19, LG Electronics is one of the companies expected to perform well. Hana Financial Investment gave LG Electronics a 'Buy' investment rating with a target price of KRW 83,000. The closing price on the 4th was KRW 62,200.

Researcher Kim said, "Through this second-quarter earnings adjustment, we raise the annual operating profit forecast for this year by 8% compared to the previous estimate. We expect this year's operating profit to be KRW 2.5421 trillion, a 1% decrease compared to the previous year." He added, "Despite the impact of COVID-19, we believe LG Electronics will demonstrate solid performance. Although the main businesses, home appliances and TVs, will see a decrease in profit compared to last year, the MC division is expected to reduce losses by cutting costs through the relocation of the Vietnam factory and an increase in ODM ratio."