[Click eStock] "LG Electronics Expected to Repeat High Start, Low Finish Performance Trend This Year"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained its 'Buy' rating and target price of 83,000 KRW for LG Electronics on the 6th, expecting a repeated pattern of high earnings in the first half and low earnings in the second half this year as well.

Ko Jung-woo, a researcher at NH Investment & Securities, said, "Considering the momentum of earnings recovery in the first half and the low stock valuation, we maintain our investment opinion and target price," adding, "The absence of new smartphone launches in the first quarter and reduced competition costs in the first half will cause the pattern of high earnings in the first half and low earnings in the second half to repeat this year." He also added, "The proportion of operating profit in the first half of this year is estimated to be 60%."

This year's consolidated operating profit is expected to grow 14% year-on-year to 2.9 trillion KRW. Researcher Ko explained, "It is difficult to expect high growth in both the cash cows, home appliances and TVs, but stable earnings flow will continue through product line expansion (such as clothes dryers and 48-inch OLED TVs) and premiumization." Despite continued poor performance in the smartphone business, cost reduction is expected due to the relocation of production plants and an increase in the proportion of Original Design Manufacturer (ODM) production, and although it is difficult for the automotive components business to turn a profit, operating losses are expected to shrink due to contributions from high-profit orders.

It is estimated that earnings decreased in the fourth quarter of last year. Researcher Ko said, "LG Electronics' consolidated operating profit in the fourth quarter is estimated to be 222.3 billion KRW, a 72% decrease from the previous quarter," and analyzed, "The pattern of high earnings in the first half and low earnings in the second half is a characteristic of the earnings structure that has been repeated for several years, so the earnings decline was fully anticipated." He pointed out that the seasonal off-season impact on major home appliance product lines (such as air conditioners), year-end sales promotion costs in the TV business, and poor performance in the smartphone business were factors in the decline of operating profit in the fourth quarter.

This content was produced with the assistance of AI translation services.