[Click eStock] "LG Electronics Expected to Surpass Q1 Earnings Consensus Despite COVID-19 Impact"

[Asia Economy Reporter Oh Ju-yeon] Daishin Securities forecasted on the 18th that LG Electronics' operating profit in the first quarter will exceed previous estimates and consensus despite the impact of the novel coronavirus disease (COVID-19). Along with this, it maintained its investment opinion as 'Buy' and the target stock price at 85,000 won.

Daishin Securities projected LG Electronics' consolidated operating profit for the first quarter of this year to be 916.5 billion won, a 1.8% increase compared to the same period last year. This surpasses the previous estimate of 792.6 billion won and the consensus of 836.4 billion won. Sales are expected to increase by 5.2% year-on-year to 15.7 trillion won.

Researcher Park Kang-ho explained, "Considering the impact of COVID-19, this is a strong performance (exceeding consensus) compared to other IT companies, and it is evaluated as a result that reconfirms the competitiveness of premium home appliances and OLED TVs."

In Home Appliances (H&A), sales growth and increased share of new growth product lines such as dryers, air purifiers, stylers, and cordless vacuum cleaners are expected to result in a high operating profit margin of 12.8% in the first quarter of 2020. In TV (HE), amid eased competition due to COVID-19, the expansion of OLED TV and large-inch shares is estimated to lead to an operating profit margin of 8.5%.

Researcher Park said, "Home appliances and TVs are expected to deliver results exceeding expectations due to the expansion of premium product shares and cost reduction efforts."

In MC (smartphones), although operating losses are inevitably expanding due to delays in new model launches and some production disruptions caused by COVID-19, cost reductions and sales increases are expected to reduce losses compared to the fourth quarter of 2019.

Researcher Park mentioned, "Considering the relatively low damage from COVID-19 and the spread of artificial intelligence (AI) and the Internet of Things, replacement demand for premium products will continue," adding, "Differentiated growth is expected."

Accordingly, consolidated sales for the entire year are estimated at 65.4 trillion won, and operating profit at 2.77 trillion won, representing increases of 5% and 13.7% respectively compared to the previous year.

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