[Click eStock] LG Electronics, Strong Home Appliance Demand and Early Turnaround Potential in Auto Parts Upward

[Asia Economy Reporter Kwon Jae-hee] Kiwoom Securities maintained a 'Buy' rating on LG Electronics on the 14th, setting a target price of 180,000 KRW. Although raw material inflation is inevitable in the home appliances sector, LG Electronics is considered to have the ability to pass on price increases due to its solid premium competitiveness. Additionally, the turnaround in automotive parts and valuation re-evaluation are also expected to be effective.

LG Electronics' consolidated operating profit for the first quarter is forecasted at 1.4474 trillion KRW. This represents a 114% increase compared to the previous quarter and is expected to meet market expectations.

Premium home appliances and TV demand, especially in the United States, are still considered robust. Furthermore, LG Electronics is performing better than competitors in TVs by leading with OLED technology, and home appliances are expected to absorb the impact of rising raw material prices through price increases. The solar panel business, which is currently in a large-scale deficit, has also decided to be discontinued, which is expected to improve profitability and optimize the business portfolio.

In particular, the pace of profit improvement in automotive parts is expected to be faster than anticipated. The high-profit infotainment project is expanding, and the electric vehicle powertrain is supported by diversified customers.

Researcher Kim stated, "In the second half of the year, as the supply issue of automotive semiconductors eases, the company is expected to settle into a structural profit trend."

LG Electronics' order backlog is expected to reach 65 trillion KRW by the end of this year. By business division, home appliances are focusing on expanding overseas sales of new appliances, with overseas sales of new appliances already surpassing domestic sales. The effect of price increases is expected to be gradually reflected in profitability improvement. Thanks to OLED, TV sales-based market share continues to rise, and the sales proportion of OLED TVs is expected to approach 40% this year. Following the 48-inch model, the market response to the ultra-small 42-inch OLED TV is also positive, with high cost efficiency. The Business Solutions division has created conditions to focus selectively on Information Display (ID) and IT businesses. The ID sector is seeing a full-scale recovery in demand in the with-COVID-19 phase, and the IT sector is strengthening its position in the premium notebook and gaming monitor markets.

Kiwoom Securities researcher Kim Ji-san analyzed, "Although concerns remain about the impact of production disruptions in Russia and the depreciation of the ruble due to the Ukraine war, it is necessary to focus on the possibility of an early turnaround in automotive parts."

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