[Click eStock] "LG Electronics, HE Division Booms... Target Price Up 20%"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] DB Financial Investment maintained a buy rating on LG Electronics on the 19th and raised the target price by 20% from the previous level to 210,000 KRW.

In the first quarter, LG Electronics' operating profit excluding LG Innotek is expected to reach 937.3 billion KRW, surpassing the previous estimate of 841 billion KRW. This is because the HE (TV) business division is expected to perform better than previously forecasted. Seongryul Kwon, a researcher at DB Financial Investment, said, "Strong OLED TV sales are sufficiently offsetting the rise in LCD panel prices," adding, "We are raising the operating profit margin from 6% to 8%." The BS (Business Solutions) division is also expected to see increased profitability due to steady demand for IT equipment.

In the H&A (Home Appliances) division, a rise in the proportion of new appliances focusing on high value-added products is expected, along with qualitative changes in other business units. In the HE division, consumer acceptance of OLED TVs is increasing, and the sales proportion of OLED TVs is expected to rise from the low 20% range last year to nearly 30% this year.

Researcher Kwon stated, "In the VS (Vehicle Components) division, sales of parts for EPT (Electric Power Train) are increasing," and added, "If strategic options for the MC (Mobile Communications) division are implemented in the future, the loss burden will be significantly reduced."

LG Electronics' pure operating profit for this year is estimated to increase by 3.8% compared to the previous forecast. The performance of LG Innotek, reflected in consolidated statements, and LG Display, accounted for by the equity method, is also expected to exceed expectations, likely raising future net profit forecasts.

Researcher Kwon added, "There may be debates about the speed of the stock price increase, but the direction is clear given the increased value of the HE business division and the equity holdings compared to before."