[Click eStock] LG Electronics: The Axis of Growth Is Changing

Prospects for Enhanced Position in the Automotive Parts Market Through Collaboration with Magna

[Asia Economy Reporter Minwoo Lee] The growth axis of LG Electronics is shifting towards automotive components. It is expected that abundant growth opportunities will arise through strategic partnerships with global automotive parts companies.

On the 6th, NH Investment & Securities maintained a 'Buy' rating on LG Electronics and raised the target price by 72.7% to 190,000 KRW. The closing price the previous day was 140,000 KRW. This optimism stems from the establishment of a joint venture with global automotive parts company Magna, raising expectations for the expansion of the electric vehicle parts business.

Researcher Koo Jung-woo of NH Investment & Securities pointed to Magna's customer base utilization as the core of the collaboration between the two companies. Researcher Koo explained, "Even if the technological competitiveness of electric vehicle parts is high, if the market position is relatively weak or the company is a latecomer, it can be difficult to expand the customer base within the market. From this perspective, this partnership represents an opportunity to diversify the customer composition."

Additionally, LG Electronics is expected to benefit from Magna's electric drive system (e-Axle) business. There is an obligation for the e-Axle to prioritize the use of LG Electronics' electric vehicle parts. With the expansion of the electric vehicle market, demand for the essential component 'e-Axle' in electric vehicle production is expected to increase. Researcher Koo stated, "The growth potential of LG Electronics' automotive components division is relatively higher compared to other divisions. Considering the cooperation with Magna, the market position of electric vehicle parts will be strengthened, highlighting LG Electronics as a notable company in the automotive components market."

Performance growth is also expected to continue this year. NH Investment & Securities forecasts that LG Electronics will record sales of 67.7 trillion KRW and an operating profit of 3.5 trillion KRW this year. These figures represent growth of 8% and 7%, respectively, compared to last year's estimates. Researcher Koo explained, "One of the core businesses will be automotive components. The sales proportion of automotive components is expected to increase from 9% last year to 10% this year and 11% next year, with operating losses of 424.1 billion KRW last year turning into operating profits of 3.1 billion KRW this year and 156.4 billion KRW next year."

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