[Click eStock] LG Electronics Halts Solar Panel Business... Profitability Improvement Effect

[Asia Economy Reporter Hwang Yoon-joo] KB Securities maintained its investment rating of 'Overweight' and target price of 170,000 KRW for LG Electronics on the 24th, expecting efficiency improvements following the decision to exit the solar panel business.

Dongwon Kim, a researcher at KB Securities, stated, "In 2020, sales from the solar panel business amounted to 881.7 billion KRW, accounting for 1.5% of total sales, and due to continued operating losses, some profitability improvements in LG Electronics' BS division are expected to appear starting from the third quarter."

Researcher Kim added, "The consolidated results for the first quarter of 2022 are estimated at sales of 19.6 trillion KRW (-6.5% QoQ, +10.3% YoY) and operating profit of 1.28 trillion KRW (LG Electronics alone: 949.7 billion KRW, LG Innotek 334.8 billion KRW, +89.5% QoQ, -27.3% YoY, operating margin 6.5%)."

He analyzed, "First quarter sales are expected to increase year-on-year across all business units except automotive components (VS), while operating profit is anticipated to decline compared to the previous year due to increased raw material costs and higher expenses caused by logistics disruptions."

Researcher Kim forecasted that the VS business will gradually improve its profitability starting in the second half of the year.

He added, "This is because the shortage of automotive semiconductors is expected to partially ease, sales from orders with favorable profitability will be reflected, and global parts supply chain issues are anticipated to improve. The VS business's turnaround to profitability is only a matter of timing, and the mid- to long-term direction toward profitability remains valid."

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