[Click eStock] "LGU+, Stock Rebound Possible if Huawei Concerns Ease"

Hana Financial Investment Issues 'Buy' Rating and Target Price of 18,000 Won... Closing Price on 1st at 11,850 Won

[Asia Economy Reporter Kum Boryeong] An analysis has emerged suggesting that LG Uplus's stock price could sharply rebound as concerns over Huawei diminish.

On the 2nd, Hana Financial Investment gave LG Uplus a 'Buy' rating with a target price of 18,000 KRW. The closing price on the 1st was 11,850 KRW.

Kim Hongsik, a researcher at Hana Financial Investment, explained, "LG Uplus's stock price has not risen despite clear recent earnings improvements due to the Huawei issue, and the supply problem of Huawei parts is likely to be resolved by next spring. Long-term profit and dividend growth is expected through 2022."

According to Kim, although the Biden administration has taken office in the U.S., sanctions against China's Huawei are likely to continue. The competition for dominance in the 4th industrial revolution is inevitably important, and looking at Huawei's actions over the past 20 years, there have been numerous problematic issues. Kim said, "There is no reason for Biden to change the well-progressing Huawei sanctions according to the U.S. government's intentions. The recent unanimous passage of the 5G support bill in the U.S. House of Representatives clearly demonstrates this. Therefore, despite the Biden administration's inauguration, it is unlikely that Huawei will maintain last year's market share (M/S) levels in 2021-2022." He added, "However, in the case of LG Uplus, the Huawei issue, which has been a strong negative factor, is likely to disappear by March or April next year. This is not because the Biden administration will lift Huawei sanctions, but because Huawei is likely to declare surrender next spring."

If the Huawei issue disappears, a flexible stock price rebound for LG Uplus is expected. Kim said, "In the past, if LG Uplus's mobile phone sales and operating profit increased, quarterly operating profit would have been around 250 billion KRW, and the stock price would likely have been formed at around 16,000 to 18,000 KRW. However, due to Huawei concerns, the current stock price remains around 12,000 KRW. As investors' perspectives shift based on future earnings, the stock price is likely to return to a normal range, so investment strategy adjustments are required accordingly."