[Featured Stock] LG Electronics Falls 3% Following 2.5% Target Price Downgrade Impact

[Asia Economy Reporter Ji Yeon-jin] LG Electronics showed a 3% decline on the 30th following a downward adjustment of its target stock price, citing automotive components as a future stock price variable.

As of 9:44 a.m. on the same day, LG Electronics was trading at 161,500 KRW on the Korea Exchange, down 3% (5,000 KRW) from the previous day.

Earlier, Shinhan Financial Investment adjusted LG Electronics' target stock price down by 2.5%, from 200,000 KRW to 195,000 KRW, stating that automotive components would be a future stock price variable.

LG Electronics recorded sales of 17.1 trillion KRW and an operating profit of 1.1 trillion KRW in the second quarter, representing approximately 48% and 66% increases compared to the same period last year. Operating profits by division were 653.6 billion KRW for H&A, 333.5 billion KRW for HE, a loss of 103.2 billion KRW for VS (automotive), 61.7 billion KRW for BS (B2B), and 137.6 billion KRW for LG Innotek. The MC (mobile) business, which is being withdrawn, incurred an operating loss of about 1.3 trillion KRW.

Shinhan Financial Investment estimated the third quarter operating profit at 1.1 trillion KRW. They projected a seasonal pattern of high in the first half and low in the second half, with 2.9 trillion KRW in the first half and 1.9 trillion KRW in the second half. Despite expectations of stagnant TV demand and increased marketing expenses, premium home appliances and TV performance are anticipated.

Go Young-min, a researcher at Shinhan Financial Investment, said, “In the case of TVs, demand stagnation is expected due to the widespread distribution of COVID-19 vaccines (according to LG Electronics' outlook). Attention should also be paid to the possibility of marketing expenses increasing to levels seen in previous years. Rising raw material and panel prices could negatively impact profitability.”