[Featured Stock] LG Electronics Rises on Q1 Earnings Surprise Outlook

[Asia Economy Reporter Song Hwajeong] LG Electronics is showing strength amid expectations of a surprise earnings performance in the first quarter of this year.

As of 9:05 AM on the 10th, the stock was trading at 148,500 KRW, up 4,000 KRW (2.77%) from the previous day.

This strength is interpreted as being due to forecasts that the first-quarter earnings will record an earnings surprise.

KB Securities revised LG Electronics' first-quarter operating profit upward from 1.1 trillion KRW to 1.5 trillion KRW, expecting it to significantly exceed market consensus. Dongwon Kim, a researcher at KB Securities, stated, "LG Electronics' first-quarter operating profit is expected to increase by 129% compared to the previous quarter, achieving the highest-ever performance surpassing the first quarter of last year," adding, "This is because, following COVID-19 vaccinations in North America and Europe, a trend of revenge consumption is emerging, shifting from existing home appliances to premium appliances and large-sized TVs, leading to strong performances in the Home Appliance (H&A) and TV (HE) divisions."

Concerns that have recently caused stock price declines, such as uncertainties over the MC (smartphone) business restructuring and decreased home appliance demand after COVID-19 vaccinations, are considered unfounded. Researcher Kim said, "The MC division's losses are expected to lead to business restructuring in the first half of this year, resulting in profit growth effects from the second half onward," and added, "Demand for home appliances and TVs is shifting to revenge consumption of premium appliances and large-sized TVs through in-store visits after COVID-19 vaccinations, so concerns about future demand declines will likely prove groundless."

KB Securities projected that assuming no smartphone losses this year, the estimated first-quarter operating profit could be raised from 1.5 trillion KRW to 1.8 trillion KRW, and the annual operating profit for this year could be revised upward from 3.8 trillion KRW to 4.8 trillion KRW.