[Click e Stocks] LG Electronics, Q4 Earnings Expected to Decline

[Asia Economy Reporter Hwang Junho] Mirae Asset Securities lowered LG Electronics' target stock price to 120,000 won on the 31st.

Mirae Asset evaluated that LG Electronics confirmed its competitiveness as a premium company by recording an operating profit of 745.5 billion won in the third quarter of this year, a 25% increase compared to the previous year. However, it viewed that this growth in performance was due to the VS division's operating loss of 538 billion won, which reflected a recall provision of 480 billion won in the third quarter of last year.

It further predicted that an operating profit of around 500 billion won, a 20% decrease compared to the previous quarter, is expected in the fourth quarter of this year. In the case of the H&A division, it is forecasted that profitability deterioration is inevitable due to limited top-line growth and increased promotional expenses including logistics costs.

Cha Yumi, a researcher at Mirae Asset Securities, stated, "As the industry downturn continues, we are lowering the target valuation of the H&A division from 4.6 times to 4.1 times," adding, "We expect a revaluation of the VS division's valuation based on an order backlog of 80 trillion won after the core business recovers."

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