[Click e-Stock] "LG Electronics Faces Short-term Weakness... Stock Price Downside Support Secured"

On July 8, Kiwoom Securities lowered its target price for LG Electronics from 110,000 won to 100,000 won, citing the company's weak performance. However, it maintained its "Buy" investment rating, taking into account LG Electronics' solid fundamentals and the potential for new long-term growth engines such as robotics.

LG Electronics reported consolidated sales of 20.7 trillion won for the second quarter, down 4% from the same period last year. Operating profit came in at 639.1 billion won, a 47% decrease year-on-year. The operating profit figure was 25% below market expectations.

Despite uncertainty in downstream demand, the HS and ES divisions maintained profitability at last year's level through business expansion, price hikes, and cost reductions. In contrast, Kiwoom Securities analyzed that the MS division swung to a loss due to weak TV demand and intensifying competition, which negatively affected the company's overall profitability.

Kim Sowon, a researcher at Kiwoom Securities, stated that while LG Electronics' short-term performance slump is inevitable, the stock price is expected to have downside support.

She said, "Despite tariff burdens from the United States and uncertainty in downstream demand, it is encouraging that the HS and ES divisions are maintaining stable results. The price hike strategy, based on competitiveness in the premium home appliance market, is viewed positively as it could offset some of the tariff impact."

She continued, "The MS division is expected to see only limited improvement in profitability in the second half of the year due to stagnant demand and ongoing price competition for TVs and IT products. As a result, we expect consolidated operating profit for 2025 to be 2.4 trillion won, below the market consensus of 3.1 trillion won."

Kim added, "In the short term, stock price volatility is expected due to macro variables such as reciprocal tariffs. However, we maintain our Buy rating, considering the solid fundamentals of the HS and ES businesses and the potential for new long-term growth engines such as robotics."