[Click eStock] "LG Electronics, Expected Impact from New Product Launches in Home Appliances and TV Divisions"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained its buy rating and target price of 170,000 KRW for LG Electronics on the 10th. This is because the improvement in product mix due to the launch of new products in the Home Appliances (H&A) and TV (HE) divisions is expected to offset the increase in raw material prices and logistics costs.

LG Electronics' preliminary sales for the fourth quarter recorded 21 trillion KRW, a 20.7% increase compared to the same period last year. Operating profit decreased by 21% to 681.6 billion KRW, slightly below the market expectation of 841 billion KRW. Dongwon Kim, a researcher at KB Securities, said, "The rise in raw material and logistics costs was reflected in the H&A and HE businesses," adding, "The Vehicle Components (VS) and Business Solutions (B2B) businesses reflected a decline in operating rates due to the shortage of automotive semiconductors and poor performance of solar modules."

Sales for the first quarter of this year are expected to reach 19.4 trillion KRW, with an operating profit of 1.3 trillion KRW. Operating profit is projected to increase by 83.8% compared to the previous quarter due to the seasonal peak. The H&A business is expected to improve profitability by expanding the sales ratio centered on premium new home appliances despite concerns about the peak-out of durable goods demand. The HE division is also expected to see overall performance improvement due to continued growth in the high-end TV market centered on OLED, despite stagnation in global TV demand.

Profitability improvement in the VS division is expected to take some time due to production disruptions caused by the continued shortage of automotive semiconductors. However, considering the quantity and quality of the VS division's order backlog, there is no significant change in long-term growth potential. Researcher Dongwon Kim analyzed, "This year's vehicle components sales are expected to reach 8.9 trillion KRW, a 23.6% increase compared to a year ago, due to the order backlog of about 55 trillion KRW and product mix improvement effects from the expansion of EV component integrated solutions," adding, "It is expected to grow at an average annual rate of about 15% until 2024."

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