[Click eStock] "LG Electronics, This Second Half Is Different... 3Q Operating Profit Over 600 Billion Won OK"

Appliance and TV Sales Drive Growth... Automotive Parts Also Perform Well
Smartphone Sector Expected to Halt Sales Decline Continuing Since 2017

[Asia Economy Reporter Minwoo Lee] LG Electronics is expected to achieve strong performance this year by surpassing 600 billion KRW in operating profit in the third quarter. It is analyzed that sales across key business units, from automotive components (VS) to TVs and home appliances, will generally rise and contribute to the results.

On the 4th, DB Financial Investment forecasted that LG Electronics' pure sales, excluding LG Innotek's performance, will reach 14.468 trillion KRW and operating profit will be 622 billion KRW in the third quarter of this year. This represents an increase of 7.8% and 4.0%, respectively, compared to the same period last year. The strong performance is attributed to the large reflection of deferred demand and projects in the third quarter. DB Financial Investment researcher Sungryul Kwon explained, "While the solid performance in the second quarter was a result of cost control amid declining sales, the strong third-quarter results are due to a significant increase in sales from key business units, improving profitability, so the quality of the performance is better."

Specifically, the H&A (home appliances) business unit's sales are expected to increase by 10% year-on-year to 5.864 trillion KRW. This is interpreted as a result of increased demand for new home appliances with good profit margins, such as hygiene appliances, due to the spread of COVID-19. The HE business unit, centered on TVs, monitors, and PCs, is expected to see an increase in OLED TV sales and total TV shipments. Sales are forecasted to reach 3.455 trillion KRW, up 7.6% from the same period last year. For automotive components (VS), deferred projects are linked to sales, with sales expected to increase by 18.7% year-on-year to 1.626 trillion KRW. The mobile (MC) business unit is also expected to halt the sales decline that has continued since the fourth quarter of 2017, thanks to expanded sales of the Velvet model in the North American market and the launch of budget products.

Against this backdrop, DB Financial Investment maintained a 'Buy' rating on LG Electronics and raised the target stock price by 23.6% to 115,000 KRW. The closing price on the previous day was 85,700 KRW. Researcher Kwon commented, "Home appliances firmly maintain their global number one position, TVs are returning to a normalization trend, and VS shows signs of emerging from continued downturn. While changes in MC need to be observed further, the fact that the possibility of further deterioration is low itself is progress, so the performance in a difficult business environment is encouraging."

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