[Click e-Stock] "LG Electronics: One-Off Expense Recognition Is a Long-Term Positive"

On December 24, DB Securities raised its target price for LG Electronics from 100,000 won to 115,000 won, stating that although a loss in the fourth quarter of this year appears inevitable due to the reflection of voluntary retirement and tariff costs, the company is expected to enter the peak season next year with a leaner structure after clearing all such expenses. The investment opinion of 'Buy' was maintained.

LG Electronics is projected to post an operating loss of 358.2 billion won on a separate basis in the fourth quarter of this year, shifting to a loss from the previous quarter. Hyunji Cho, a researcher at DB Securities, explained, "A loss for the quarter seems unavoidable as voluntary retirement costs and various tariff-related expenses are each expected to amount to approximately 300 billion won." However, she noted that the voluntary retirements are expected to be completed within the year, and the company will gradually benefit from cost efficiencies in tariffs as production sites are relocated.

The core Home Appliance (HS) division appears to have successfully raised prices based on its competitive edge in the market. There are also expectations that the Vehicle Solutions (VS) and Eco Solutions (ES) divisions will emerge as key variables for LG Electronics' mid- to long-term performance growth.

Cho stated, "Despite the weak performance of LG Magna EPT, the VS division is achieving stable profitability thanks to both quantitative and qualitative growth in in-vehicle infotainment (IVI), which accounts for about 70% of VS revenue." Regarding ES, she added, "Quarterly profitability is expected to be negative due to labor cost-related expenses, but the company is actively seeking to expand its customer base for hyperscaler cooling solutions and is participating in group-level order bids."

Cho concluded, "While the one-off expense recognition is a burden on short-term performance, it should be seen as a positive since all costs will be reflected within the year, allowing the company to enter the peak season (the first half of next year) with a leaner structure. From the perspectives of structural improvement and valuation attractiveness, LG Electronics holds mid- to long-term investment appeal."