[Click e-Stock] "Home Appliance Subscription and WebOS to Drive New Growth for LG Electronics"

Target Price Set at 129,000 Won

Hana Securities stated on May 22 that "LG Electronics' new high-margin businesses, such as home appliance subscriptions and WebOS, will serve as mid- to long-term growth drivers."

Kim Minkyoung, a researcher at Hana Securities, commented, "Both businesses are expected to show rapid and steep growth based on strong preference in the premium home appliance and TV markets." She further analyzed, "Accordingly, their contribution to profits is also expected to gradually expand."

She maintained a 'Buy' investment rating and set a target price of 129,000 won. Kim explained, "Currently, LG Electronics' share price is trading at a 12-month forward PBR of 0.57 times, which is near the lowest level of its historical band." She attributed this to a combination of factors, including uncertainty stemming from tariff policies under the Trump administration, concerns about sluggish demand as a result, and worries over the growth of Chinese companies.

However, she believes that there is ample room for a rebound in the share price if these concerns are alleviated. She added, "Considering the pattern of tariff policies during the first Trump administration, it is highly likely that a compromise will be reached at a lower level than feared." She also noted, "LG Electronics maintains a solid market share in the U.S. premium market and can minimize the impact of tariffs through a swing production system that utilizes manufacturing bases in Mexico and the United States." Additionally, she stated, "Although Chinese TV companies are expected to continue their low-price offensive, LG Electronics is likely to successfully defend its profitability by differentiating its products through software platforms such as WebOS."

She also forecast that momentum related to the India IPO will become more prominent in the second half of the year. LG Electronics submitted a preliminary listing review application to the Securities and Exchange Board of India in December last year and received preliminary approval from authorities in March this year. The listing process must be completed within one year from the date of preliminary approval.

For the second quarter, LG Electronics is expected to report consolidated sales of 17.8384 trillion won and operating profit of 872.6 billion won, representing a 3% increase and a 16% decrease year-on-year, respectively. Kim assessed, "Although this is a period when the impact of tariffs is becoming more pronounced, LG Electronics can defend its margins by expanding operations at its production bases in Mexico and the United States, as well as through price increase strategies in the premium market." By segment, she predicted that the MS (home appliance) division would struggle due to sluggish demand, but the VS (vehicle solutions) division would benefit from strong infotainment sales, and the ES (energy solutions) division would see positive effects from seasonal demand.