[Click eStock] "LG Electronics, Expectation for Corporate Value Reassessment"... Target Price Up

On the 8th, Kiwoom Securities further raised its earnings estimates for LG Electronics, maintaining a buy rating and increasing the target price from 150,000 KRW to 160,000 KRW.

Ji-san Kim, a researcher at Kiwoom Securities, stated, "A differentiated and dramatic earnings momentum is emerging within the electrical and electronics sector," adding, "We are raising our earnings estimates once again."

LG Electronics' standalone operating profit for the first quarter of this year is expected to be 1.3635 trillion KRW, down 15% year-on-year, while consolidated operating profit is forecasted to decrease by 22% to 1.5187 trillion KRW. The consensus estimate for consolidated operating profit was projected at 964.4 billion KRW.

Researcher Kim explained, "The selling price is supported by premium demand in North America and a favorable product mix, along with exchange rate benefits from the strength of foreign currencies," adding, "Shipment volume conditions have been set for further expansion alongside the normalization of distribution inventory." He continued, "Cost reduction effects, mainly in logistics expenses, are appearing dramatically."

In the home appliances sector, premium demand centered in North America remains strong, and LG Electronics is increasing its market share by leading with new appliances. Significant improvements in raw material costs and other expenses are expected to restore profitability to boom-period levels. For TVs, proactive inventory management ahead of market conditions has normalized distribution inventory, and the recovery in demand for OLED TVs in Europe is positive.

Furthermore, profit contributions from the platform business are beginning in earnest. Automotive parts are showing strong sales and orders. The product mix is improving, focusing on premium infotainment, and the automotive lamp segment is regaining normal profitability. The IT segment of the business solutions division is expected to recover from sluggishness thanks to new model launches, increased demand from public institutions early in the year, and cost reductions in LCD panels.

Researcher Kim said, "With strong performance in core businesses and highlighted achievements in growth sectors, a revaluation of corporate value is anticipated," adding, "The automotive parts segment is expected to realize growth exceeding expectations based on sufficient order achievements."

He also noted, "The robotics and electric vehicle charging infrastructure businesses have entered their main tracks and are expected to show sales doubling over the next several years," elaborating, "Robotics is leading in the B2B specialized service robot field, including serving, guidance, and delivery, while the electric vehicle charging infrastructure business plans to expand beyond charger manufacturing (HW) and integrated control solutions (SW) into charging infrastructure operation."