[Click eStock] "LG Electronics, Undervalued Stock Compared to Global Peers"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment evaluated on the 6th that LG Electronics is showing an undervalued stock price level compared to global peers in the same industry. They maintained a 'Buy' investment rating and a target price of 225,000 KRW.

Researcher Kim Rokho of Hana Financial Investment stated, "LG Electronics' sales for the third quarter of this year are expected to be 18.0893 trillion KRW, and operating profit is expected to be 1.1197 trillion KRW, representing an 18%, and 4% increase year-on-year, respectively." The main reason for the downward revision of the previous forecast was due to lowered performance expectations for the BS and independent business units.

For the core business units, home appliances and TVs, although increased costs such as exchange rates, logistics, and transportation expenses were burdensome, premium home appliance demand in the U.S. remained strong, and sales of OLED TVs and others were robust, leading to the judgment that performance will be steady.

He explained, "The recent decline in LG Electronics' stock price is interpreted as concerns over 2022 performance rather than short-term results," adding, "Since home appliance sales growth was better than usual due to increased stay-at-home demand after COVID-19, concerns about home appliance demand after reopening are inevitable."

However, LG Electronics demonstrated better sales growth rates than global home appliance companies even before the stay-at-home demand fully materialized. In particular, as of 2022, the price-to-earnings ratio (PER) was only 6.3 times and the price-to-book ratio (PBR) was 1.0 times, which are lower than the average PER of 9.5 times and PBR of 2.1 times of global home appliance companies sharing the same industry conditions. Researcher Kim said, "Considering that LG Electronics has secured future growth engines such as the VS business unit, there is no valuation burden," and added, "The point at which concerns about home appliances materialize is paradoxically likely to be the time for the stock price to rebound."

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