[Click eStock] "LG HelloVision, Q4 Slump... Synergy Expected with LG Uplus"

Daishin Securities Report

[Asia Economy Reporter Gong Byung-sun] Daishin Securities maintained a target price of 5,900 KRW and an investment rating of 'Marketperform' for LG HelloVision on the 3rd, stating that although the company’s fourth-quarter results last year were sluggish, synergies with LG Uplus are expected in the future.

LG HelloVision recorded its lowest quarterly profit last year due to continued declines in subscribers and average revenue per user (ARPU). Revenue was 270 billion KRW and operating profit was 7.9 billion KRW, meeting consensus estimates, but it posted a net loss of 330 billion KRW due to goodwill impairment on acquired subsidiaries caused by the impact of COVID-19.

Broadcasting and internet revenue in the fourth quarter of last year slightly rebounded compared to the same period the previous year but declined on an annual basis. Both subscribers and ARPU are estimated to have entered a downward trend. Analyst Kim Hee-jae of Daishin Securities explained, “Broadcasting and cable TV revenue reached 140.8 billion KRW and internet revenue 26.8 billion KRW, but due to weakness in internet telephony (VOIP) and declines in subscribers and ARPU, the business experienced negative growth.”

The mobile virtual network operator (MVNO) segment also performed poorly. MVNO recorded revenue declines both in the fourth quarter and annually last year. Service revenue was 38.1 billion KRW, down 16.5% year-on-year. Analyst Kim said, “Subscribers are on a declining trend, but ARPU is estimated to have slightly rebounded.”

Despite the poor performance in the fourth quarter of last year, synergies with LG Uplus are expected going forward. Analyst Kim stated, “Although LG HelloVision was incorporated as a subsidiary of LG Uplus last year, it is true that synergies have not yet been visible. In the future, LG Uplus could jointly utilize LG HelloVision’s network or leverage the combined subscriber base of internet TV (IPTV) and cable TV (CATV) to gain an advantage in home shopping commission negotiations, creating synergies.”

Kim added, “Although LG Uplus’s acquisition of LG HelloVision caused an annual operating profit decrease of about 33 billion KRW for LG HelloVision, operating profit is expected to reach the 60 billion KRW range next year when full synergies begin to materialize.”

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