[Click eStock] "LG Electronics, Q4 Earnings Meet Market Expectations... Entering Revaluation Phase"

[Asia Economy Reporter Oh Ju-yeon] Kiwoom Securities evaluated that LG Electronics' fourth-quarter performance last year met market expectations and predicted that its investment attractiveness will be highlighted in the first half of this year.

According to Kiwoom Securities on the 11th, LG Electronics' provisional operating profit for the fourth quarter of 2020 increased by 536% year-on-year to 647 billion KRW, in line with the market consensus (626.3 billion KRW). Sales also rose 17% compared to the same period last year, delivering better-than-expected results, which they analyzed as proof that the company is performing well mainly with premium home appliances and TVs.

Most importantly, the automotive parts segment approached the break-even point based on the start of new electric vehicle projects and demand recovery in advanced countries, which was described as a significant achievement. The TV segment realized favorable profitability compared to the same period last year through a premium-focused mix improvement including OLED and ultra-large models over 70 inches, as well as efficient marketing cost execution mainly online. Home appliances also continued strong sales driven by increased home economy demand and new growth appliances. On the other hand, smartphones saw an expanded deficit again due to increased year-end business efficiency costs.

Kiwoom Securities forecasted that LG Electronics' operating profit for the first quarter of this year will decrease by 7% year-on-year to 1.0121 trillion KRW, expecting that investment attractiveness will be highlighted in the first half.

Researcher Kim Ji-san of Kiwoom Securities said, "Although demand uncertainties remain due to factors such as partial lockdowns in Europe amid the resurgence of COVID-19, LG Electronics will demonstrate high profitability based on enhanced competitiveness of premium products, strengthened online channel strategies, cost improvements, and efficient expense management."

Home appliances are expected to exceed global market growth rates through global expansion of health appliances, increased achievements in European built-in appliances, and fostering of the rental business, realizing high profitability during the domestic peak season in the first half.

TVs are expected to actively expand sales with an increased OLED lineup, with anticipated positive effects from major sports events in the first half. Automotive parts are analyzed to undergo a structural turnaround based on the expansion of electric vehicle share and securing economies of scale.

Smartphones are expected to reduce deficits through targeting affordable 5G phones and expanding ODM, but additional efforts for business efficiency appear necessary.

Researcher Kim stated, "A vigorous revaluation of valuation will take place," recommending a 'Buy' investment opinion and setting a new target stock price of 180,000 KRW.

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