[Click eStock] "LG Electronics, Full-Scale Profit Growth Possible in Second Half"

NH Investment & Securities maintained a buy rating and a target price of 150,000 KRW for LG Electronics on the 31st, forecasting a full-fledged profit growth trend in the second half of the year.

Despite sluggish demand for home appliances and TVs due to the deterioration of the global macro environment, LG Electronics is expected to achieve solid performance through proactive inventory adjustments and cost reduction effects. Considering the full-scale diversification of customers and products in the automotive components sector and the high possibility of home appliance demand recovery in the second half, the stock is still judged to be attractive.

Lee Gyu-ha, a researcher at NH Investment & Securities, said, "In the home appliance division, transportation costs, which were extremely high, have normalized, and proactive inventory adjustments have led to a faster-than-expected margin recovery." He added, "The increase in sales proportion driven by an active B2B (business-to-business) growth strategy has also contributed positively by leading to stable demand and improved profitability."

He continued, "The automotive components division is currently demonstrating stable sales growth based on its order backlog," and explained, "In the infotainment division, the expansion of high value-added product sales and the diversification of customers to European companies in LG Magna E-Powertrain, alongside the increase in volume from existing customers, are attractive factors." However, he noted, "The recent loan to LG Display was an unexpected aspect and is somewhat disappointing from a shareholder value perspective."

LG Electronics' operating profit for the first quarter is expected to record a solid performance, exceeding previous estimates at 1.2361 trillion KRW. Although profits are expected to slightly decrease in the second quarter due to increased marketing expenses compared to the previous quarter, there is a high possibility of profit growth year-on-year. In particular, in the second half of the year, a full-fledged profit growth trend is expected due to the recovery of home appliance and TV demand and cost reduction effects in the automotive components division, and a high growth rate is anticipated in terms of the automotive components order backlog.