[Click eStock] "LG Electronics, Q1 Earnings Surprise Expected"

[Asia Economy Reporter Song Hwajeong] KB Securities forecasted on the 10th that LG Electronics will record a surprise earnings performance in the first quarter of this year, maintaining a 'Buy' investment rating and a target price of 220,000 KRW, designating it as the top pick in the electrical and electronics sector.

Dongwon Kim, a researcher at KB Securities, said, "LG Electronics' first-quarter operating profit is estimated at 1.5 trillion KRW, significantly exceeding the market consensus of 1.1 trillion KRW, indicating an earnings surprise," adding, "The MC (smartphone) business is expected to reduce uncertainty through business restructuring within the first half of this year." Assuming no smartphone losses this year, the estimated first-quarter operating profit is expected to reach between 1.5 trillion KRW and 1.8 trillion KRW, and the annual operating profit for this year could be revised upward from 3.8 trillion KRW to 4.8 trillion KRW.

The first-quarter operating profit of 1.5 trillion KRW represents a 36% upward revision from the previous estimate of 1.1 trillion KRW. Researcher Kim stated, "LG Electronics' first-quarter operating profit is estimated at 1.5 trillion KRW, a 129% increase compared to the previous quarter, achieving the highest-ever performance surpassing the first quarter of last year," explaining, "This is due to a shift in rebound consumption after COVID-19 vaccinations in North America and Europe, from existing home appliances to premium appliances and large-sized TVs, leading to strong performances in the Home Appliance & Air Solution (H&A) and Home Entertainment (HE) divisions."

Recently, LG Electronics' stock price has fallen 18% from its previous peak, reflecting concerns over expanded losses due to uncertainty in the MC business restructuring and fears of decreased demand for home appliances and TVs after COVID-19 vaccinations. However, these concerns are considered unfounded. Researcher Kim said, "The MC division's losses are expected to be restructured in the first half of this year, leading to profit growth effects from the second half," and added, "Demand for home appliances and TVs is shifting to premium appliances and large-sized TVs through in-store visits after COVID-19 vaccinations, so concerns about future demand decline will prove to be groundless."

In particular, corporate value is expected to increase due to the turnaround to profitability in the automotive components business. Researcher Kim predicted, "If the MC business restructuring in the first half and the VS (vehicle components) profitability turnaround in the second half materialize this year, LG Electronics' corporate value will increase by more than 10 trillion KRW considering the growth potential of electric vehicles."

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